City of Powell River’s granting of a grace period for paying taxes has resulted in about three-quarters of the city’s tax bills having been paid. This will affect what services the city can offer.
To help taxpayers in the COVID-19 period, council extended the penalty date for paying taxes from July 2 to September 30, after which a five per cent penalty will be applied. Another five per cent will be assessed on unpaid taxes by mid-December. Typically, taxes not paid on July 2 are subject to 10 per cent penalty.
At the July 23 finance committee meeting, chief financial officer (CFO) Adam Langenmaier provided his monthly financial update for June 2020.
Langenmaier said he could provide an update on the property tax collection rate as of the July 12 deadline for submission of his report to council. He said at the point, the city had collected 72 per cent of its taxes. He said another week had passed and the city had brought in another $550,000, and that was a payment from the provincial government, which represented people who chose to defer their property taxes.
Langenmaier said in the past, this payment has usually come in much later, in September or early October.
“It’s really nice that the new, online deferral program is speeding up the process,” said Langenmaier. “Total collections have come up to about 74.1 per cent.”
In a report to council, Langenmaier stated the historical collection rate is 96.7 per cent by July 2.
Langenmaier then reviewed the city’s fees and charges and said there was not a significant amount of change since the May financial report. He said he spoke with the director of parks, recreation and culture about the Willingdon Beach Campground and it is capping its size to 80 per cent of capacity and at times is reaching that 80 per cent capacity.
“It’s good to see that people are taking part and using our facilities,” said Langenmaier.
In terms of expenses, Langenmaier reviewed wages. He said wages represent the city’s biggest expense at nearly two-thirds of total operating expenses. The city is trending at 85 per cent of what has been budgeted. Langenmaier expects that to continue with reduced services due to COVID-19.
The CFO then reviewed the city’s cash position. He said the city is in a good cash position as of report time. He said the city was $10 million in the black.
Langenmaier said there was no recommendation for changes at this moment. He said initially in the onset of this reporting structure, there were recommendations to make changes to the city’s service levels at Powell River Recreation Complex, once the city hits 85 per cent of property tax collection.
“We are not there yet,” said Langenmaier. “The recreation staff are looking at other different options of what they can do to provide some service but really keep the amount of tax subsidy down in those areas and that will come out in future reports.”
Councillor Cindy Elliott said she had a question about the percentage of residential taxes collected. She wondered what the percentages were.
Langenmaier said he did not have that analysis at this point but he could provide it in future reports.
Elliott said her second question was whether it would be wiser to tie recreational programs to not only safety, but also for collection of residential taxes, so residents have a little bit more control over when they get their services.
Langenmaier said he did not have an answer for that question because it is up to the finance committee and city council to make those determinations.
Councillor Jim Palm asked what percentage of Catalyst Paper Corporation’s bill was represented in the city’s overall budget.
Langenmaier said Catalyst’s tax bill was $3 million and the city’s total tax base was $18 million. Mayor Dave Formosa said it was about 15 to 18 per cent of the city’s total tax bill.
Finance committee chair councillor George Doubt said he did not think the city could reach the 85 per cent collection target for restoration of recreation complex services unless Catalyst pays its taxes.
Doubt said in a future report, maybe there could be a breakdown of residential, commercial and industrial taxes, and the percentage that has been paid. Langenmaier said that can be done.
Elliott asked if the committee could entertain at its next meeting, putting up for discussion the plan that the city has for reopening the recreation complex and looking at some of those decisions again.
Doubt said he thinks council considered how it could pay for things it needs to pay for as the money comes in and still be in a positive cash flow position. He said the 85 per cent figure was a decision council came up with.
Trying to apportion parts of it to one group of taxpayers might be pretty difficult, looking at all of the things that have to be considered in the budget, said Doubt.
Formosa said he has no appetite for spending money the city does not have.
“We’ll see what the next couple of weeks bring,” said Formosa.
Doubt said that hopefully everyone will do everything they can to encourage all of the taxpayers who haven’t paid their taxes yet to do so as quickly as possible so the city can provide the services it hopes to provide.
Formosa said the fact that taxpayers have until September to pay their taxes without penalty means people are taking advantage of it. He said he had phoned some of his colleagues and they haven’t paid yet.
“They have until September and they are waiting,” said Formosa.
Doubt said the next big decision point is at the end of September, when the first penalties kick in.
