City of Powell River finance committee receives first draft of financial plan

Average home tax rate could go up nearly five per cent

City of Powell River’s finance committee is wrestling with the 2019-2023 financial plan draft, which, if adopted as written, would result in a 4.8 per cent tax increase for an average city home.

At the Wednesday, March 27, finance committee meeting, committee members were divided on whether the recommended tax increase should be near five per cent, or at three per cent, which is the cost of living increase from last year.

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Mayor Dave Formosa and councillor Jim Palm were advocates for the three per cent increase, while councillor CaroleAnn Leishman suggested the finance committee listen to staff and consider the recommended tax increase brought forward by chief financial officer Adam Langenmaier.

In Langenmaier’s financial plan draft report to the finance committee, the assessment of the average single-family dwelling value in Powell River in 2018 was $305,300, and this increased to $345,163 for 2019.

In 2018, taxes on an average residential property were $1,588.84 in variable tax and $335 in flat tax, for a total of $1,923.84. The proposal for 2019 would be variable tax of $1,765.23 and flat tax of $250, for a total of $2015.23. This represents a change of $91.39, or 4.8 per cent for the average homeowner.

“My feeling is the cost of living is three per cent, then we have to live with three per cent,” said Formosa. “The taxpayers will have the 4.8 per cent if they are average. For a home worth more than $350,000, it will be six, seven or eight per cent. My pitch is cost of living: three per cent.”

Councillor Jim Palm asked when it states in the report that the average homeowner is going to see an increase in taxation of $95 or less, does that factor in all the additional costs taxpayers will be facing?

Langenmaier said the property tax change only encompasses the property tax, and not increases in services such as sewer and water.

“This year isn’t going to be pretty, folks,” said Palm. “We’re between a rock and a hard place in this city. We’re going to have a tax revolt or people are going to be moving into the regional district.”

Leishman said she is happy with what the chief financial officer presented to the finance committee.

“We are under five per cent,” she said. “We have to be smart. We’ve been too cautious on tiny little increases each year when we have problems we need to address and need to budget for.”

Leishman said she thinks the committee needs to listen to staff.

“I don’t feel comfortable handcuffing staff and saying three per cent, when obviously there are plans to keep us moving forward with 4.8 per cent,” she added. “It probably should be higher than that, but we have to be smart. We can’t leave ourselves open to risk.”

Palm said when the reduction in flat tax is factored, some people on fixed incomes or pensions who have lived in their houses for years are going to be taxed out of their homes.

Councillor Rob Southcott, chair of the finance committee, said the city’s costs are exceeding revenues. He added that increasing complexities and demands on the city are growing at a much higher rate than the cost of living. While the consumer price index is three per cent, energy costs, for example, have increased at a substantially higher rate in the past few years.

Southcott said increasing costs comparative to revenue has gone on for a long time. He said he appreciates the difficult position the city is in, but it cannot rely on growth to solve its problems.

Southcott supports the lowering of flat tax from $335 to $250 but said he is concerned about some people in homes that are at the higher end of the assessed value. He added, however, that people in those more expensive homes can defer taxes or take out a reverse mortgage.

“I know that’s terrible for people to think, who don’t want to defer taxes, or don’t want a reverse mortgage, but when we are talking in terms of a community, you have to look at every possible thing we can do in order to afford what we are doing as a community,” said Southcott. “This is a difficult time, but if we actually face the challenge we are confronting, we have one option, and that is to do it together.”

According to Langenmaier’s report to the finance committee, 62 per cent of all residential properties in Powell River are valued are $350,000 or less, which means 62 per cent of property owners would see a change to their tax bill of $95 or less.

Langenmaier said what he is working on for his next presentation to the finance committee is his best recommendations to get the city through 2019, and how to get through the next 10 years without always having to be in this situation each year, scrambling.

The city has new budget software, which will make the budgetary process easier, and people can look at the proposed budget online at powellriver.openbook.questica.com and see the details.

“This is a good step,” said Langenmaier, “but at this point the city has some work to do to get to a balanced budget.”

 
Copyright © Powell River Peak

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