Draft financial plan indicates tax increase for average Powell River home

Water, sewer and garbage fee increases deferred until 2021

City of Powell River’s preliminary 2020-2024 financial plan is showing a 4.8 per cent increase on residential taxes and utilities from 2019 for the average residential property.

Chief financial officer (CFO) Adam Langenmaier introduced the preliminary financial plan at the Thursday, January 23, finance committee meeting.

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According to Langenmaier’s report to the finance committee, for the average residential property, valued at $361,478, owners will pay $2,189 in property taxes, plus $848 in utilities, for a total of $3,037. This is an increase from the prior year of $138 (4.8 per cent). The total variable property tax payable has increased by 11.6 per cent, however, this has been offset by a decrease in flat tax ( minus $70,  minus 28 per cent). The average residential property will pay $53.32 toward municipal debt associated with the liquid waste treatment plant.

Water, sewer and garbage fee increases have been deferred until 2021.

Speaking to the finance committee, Langenmaier said some of the expected changes in municipal finances are with wages. Langenmaier said an increase of $760,000 is expected, which represents 4.5 per cent over last year.

“In the business we are in, the majority of our expenses are in wages,” said Langenmaier. “Some of this change can be attributed to the regular cost of living increases for CUPE (Canadian Union of Public Employees), plus an increase in Canada Pension Plan rates and a few new staff members.

“We received notification that there are expected costs for the unionization of the RCMP. This information just came to me today, estimated at $150,000 to $250,000. It will be a one-time hit, but we are establishing an RCMP reserve, which would be a very good place to pull funding for an expense like this.”

One of the big cost carryovers is the expected expense of the construction of a new fire hall, said Langenmaier. The recommendation is to put money into the city’s general building capital reserve for this purpose.

On the revenue side, property taxes are the main way municipalities collect money, according to Langenmaier. He said there is an expected increase of $1.5 million. The increase in property taxes is to fund service levels established by council from the 2019-2023 plan, becoming the basis of the 2020 plan.

“Of this increase, it’s an 8.7 per cent increase overall to our tax revenue,” said Langenmaier. “This includes a proposed general increase authorized by council, non-market changes (new construction) and a proposed municipal debt levy.”

Langenmaier said for new construction, the city is expecting about $145,000 of taxation from new money. This is property that is being taxed for the very first time this year.

Langenmaier then outlined the proposed municipal debt levy, which is tied to the borrowing associated with construction of the liquid waste treatment plant.

“There’s a recommendation before you to put the debt servicing costs associated with the plan on the tax bill as a separate line,” said Langenmaier. “Residents can see this is their share of the debt for the treatment plant. The other benefit is it allows people to use the deferral method to defer that piece of property tax tied to the plant.”

Langenmaier said last year’s authorized tax increase was five per cent. With this year’s changes to the flat tax, the average home before utilities are calculated will have a change of 4.8 or 4.9 per cent, he added.

Mayor Dave Formosa asked if that included borrowing for the liquid waste treatment plant. Langenmaier said no. Formosa said that particular line item will be $53.32 for the average home in Powell River, which Langenmaier said was correct.

Langenmaier said with the average home being valued at a little more than $361,000, the total variable tax for general tax is expected to be $1,958, with the municipal debt levy being $53, bringing the total variable tax for an average home in Powell River to $2,009. He said this is an increase of 11 per cent over last year.

Langenmaier said the next consideration was council’s approved reduction in the flat tax, which will bring the taxation on a home to 6.7 per cent.

“We all know that taxation is not the only source of revenue,” he added. “We have utilities and garbage fees. I am not recommending any rate increases for sewer and water. Both funds are adequately funded at this time. By doing no rate changes to our utilities, the total property tax charges from last year to this year is $138.37, or 4.8 per cent on the average home.

“We are staying within the targets identified by council last year to keep the overall change reasonable.”

Commercial properties will see a bigger jump, with an increase of 6.7 per cent.

The city has until May 15 for final adoption of the budget.

Copyright © Powell River Peak

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