City of Powell River committee receives financial plan

Preliminary document introduced by chief financial officer

City of Powell River councillors have received the preliminary five-year financial plan for 2021 to 2025.

At the November 26 finance committee meeting, chief financial officer Adam Langenmaier said at a meeting on August 27, council directed staff that the list of city services funded in 2020 will form the basis for services funded in 2021. Langenmaier said the budgeting process is difficult because of COVID-19.

article continues below

In terms of property tax levy, the plan, as approved in the prior year, included a 4.8 per cent tax increase overall. Langenmaier said he wants to move in a direction so commercial rates are not overly high in comparison to residential rates, and light industry and managed forest land rates are where they should be compared to provincial averages.

Industrial taxation for Catalyst Paper Corporation will be going up $150,000 under the revitalization tax exemption bylaw.

Langenmaier said new construction that has not been taxed in the past will add about $85,000 to city tax rolls. He said this is slightly lower than the prior year. For 2021, Powell River saw an increase in residential assessments of $18.4 million, compared to $23.2 million in 2020.

The proposed municipal debt levy, which is money for paying the debt on the consolidated wastewater treatment plant, has been adjusted. Langenmaier said receipt of funding from the provincial government in a lump sum has given the city the ability to take on debt at different rates, so the city does not need to take on as much in a shorter time because it is not paying the cash up front and waiting on grants.

“We can use the grant money to bridge while we pay debt over a longer period,” said Langenmaier.

He said the rationale for spreading out the debt is it reduces the city’s interest rate risk. He said interest rates are low right now but if the city loads up on debt to take advantage of low interest rates today, in 10 years’ time when all that debt is maturing, and if interest rates are higher, the city would require a significant change in taxation.

“By taking smaller amounts of debt over a longer number of years, we will really smooth that impact,” said Langenmaier. “If rates are higher, we are not hit as hard in a single year.”

According to a report to the finance committee, Langenmaier stated that by 2025, it is expected that the liquid waste treatment plant will be complete and debt servicing costs will remain at an estimated $1.2 million per year, which represents a 7.5 per cent increase in taxation as compared to the 2020 base tax levy without any debt servicing costs associated with the plant.

“As we move past 2025, we are not taking on any more debt for the plant,” said Langenmaier. “We are starting to pay it down.”

Langenmaier said moving into expenses, wages are going to be increasing. The expected change is $590,000. He said in addition to a two per cent wage increase for CUPE workers, there are also increases to the Canada Pension Plan contribution rates and employer health tax.

Langenmaier said he wanted to bring attention to reserve funds, specifically the firehall reserve. He said direction to establish the reserve has not made it to the budget in the past. He said he has not received clear direction to make a contribution to the firehall reserve. In his report to the committee, Langenmaier stated the recommended reserve contribution is $450,000. Estimated construction cost of the new emergency services facility is $10 million.

He said his request is that councillors accept the preliminary plan for information and provide staff with direction to prepare the 2021 to 2025 financial plan with a residential property tax increase of no more than five per cent.

Mayor Dave Formosa asked Langenmaier if he is asking for five per cent per year over five years. Langenmaier said he would like to focus on this year.

Formosa said, the preliminary budget proposal called for a five per cent increase this year, and he wondered if that’s all in, including sewer, water, garbage and other items.

“Have I got that right or is it five per cent plus?” asked Formosa.

Langenmaier said right now, the finance department is looking at the taxation part being five per cent. He said it could be direction from council if it wants to see no more than an overall change on a home to be at that five per cent range. That would be similar to where the city hit 4.8 per cent on an average home in 2020, according to Langenmaier. Formosa said that figure included everything, such as sewer, water and other items.

Councillor Maggie Hathaway said the contribution to reserves for the emergency services facility was zero dollars. She said she thinks it’s imperative that council look at that and asked how council goes about having a figure placed there.

“Should the committee be bringing forward a motion to council or how would that happen?” asked Hathaway.

Langenmaier said the committee could direct staff to put a figure in there. Hathaway said she would like to see that included as a direction to staff.

Councillor Cindy Elliott said while she agrees that reserves should be set aside for the new firehall, she has concerns about increasing taxes to businesses and to residents, both of which have been affected by the pandemic.

“I guess I’m making an appeal to use our COVID-19 relief funds for tax relief,” said Elliott.

Formosa said the proposed increased contribution to reserves for the firehall would equate to about a three per cent increase in taxation, over and above the five per cent being proposed, so that would amount to eight per cent.

He said maybe a $200,000 contribution to the reserve would be appropriate and that it’s done in such a manner that it doesn’t change the five per cent increase figure.

“I’m going to suggest the five per cent is all inclusive of everything,” said Formosa.

Committee chair councillor George Doubt said he is going to suggest that the recommendation is that the committee accept the financial plan report and that it provide staff with direction to prepare a financial plan with a property tax increase of five per cent or less. He said it makes sense to add a request from council to investigate creating a firehall reserve. The committee agreed with that direction.

Copyright © Powell River Peak


NOTE: To post a comment you must have an account with at least one of the following services: Disqus, Facebook, Twitter, Google+ You may then login using your account credentials for that service. If you do not already have an account you may register a new profile with Disqus by first clicking the "Post as" button and then the link: "Don't have one? Register a new profile".

The Powell River Peak welcomes your opinions and comments. We do not allow personal attacks, offensive language or unsubstantiated allegations. We reserve the right to edit comments for length, style, legality and taste and reproduce them in print, electronic or otherwise. For further information, please contact the editor or publisher, or see our Terms and Conditions.

comments powered by Disqus


Are you satisfied with the speed in which vaccines are being distributed and administered in BC?

or  view results

Popular News

Community Events Calendar