City budget flawed: What have you heard about the City of Powell River’s 2016 budget [“City releases five-year financial plan,” December 2]? Well, many self congrats by the city about completing the budget before spending starts in January (good news), a modest tax increase at 1.375 per cent due to library debt-servicing costs, which is a bit of the shell game, and a $1.4 million deficit, which is actually equivalent to a 11 per cent tax increase, handled with city surplus/reserves (bad news).
Life is good, no worries, no shot over the bow or warning of any fiscal storm; unanimously approved by council.
The 2015-19 budget plan committed to cap municipal taxes for city operations, excluding water and sewer, and stated “the city will increase revenue and/or decrease expenses to lessen the burden on its property tax base.” The plan did not say it would balance the budget with surplus/reserves.
In fact, the 2014-18 Financial Plan file 540-54-05 stated “general reserves do not have meaningful funds available in 2014 or thereafter.”
This ambitious plan was launched with a windfall of additional revenue, including money from Catalyst, loan retirements, timber harvesting and expanded usage of the gas tax, plus reduced equipment reserves.
With such an influx of monies, it was plausible and believable that council’s commitment to cap municipal taxes for city operations could happen. After only one year, the city’s $1.4 million of additional taxes for municipal purpose has been consumed by this year’s $1.4 million deficit.
Logic would suggest to achieve this commitment one would have to control spending. There has been no control, rather explosive spending not seen in years.
It could be expected, on occasion, that increases within an individual department could exceed the rate of inflation. However, excessive increases were approved in multiple departments in budget years 2015 and 2016.
Now that the city’s cost base has been significantly increased, it will be interesting to see how the remaining three years of council’s term play out. Will council achieve the city’s strategic priorities of “Living Within Our Means”?
Paul McMahon
Invermere Court
