Letter: Fiscal challenge in Powell River

It seems hard to fault a target of five per cent property tax increase [“Draft financial plan indicates tax increase for average Powell River home,” January 24], with crime rates soaring and a $70-80 million waste treatment plant project on the horizon (essential services).

But what I do fault and consider gross mismanagement is City of Powell River’s lack of fiscal discipline, the reasons the city is where it is financially (low reserves, a doubling of debt servicing costs and close to double digit per cent increase in expense spending), and yet, excessive spending, goes unabated.

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Five years ago, council had approximately $2 million surplus; through excessive spending on non-essential services, council is now dealing with a $1.5 million deficit.

The city’s excessive spending has necessitated, in 2020, increasing the property tax levy by $1.5 million, 8.7 per cent, resulting in an 11.6 per cent increase in the average home property tax.

To make this increase palatable to the electorate, (this year) two uncommon adjustments were made to the tax calculation, the flat tax reduction and applying zero per cent increase to the 2020 utility fees for water, sewer and garbage, which meant that for the segment of the residential homeowners, those with a $361 thousand assessment, the unacceptable rate of 11.6 per cent property tax, dropped from 11.6 per cent to 4.8 per cent.

I am not saying these adjustments are unacceptable accounting adjustments, but rather they are inappropriate financial practices considering Powell River’s fiscal position and near-term financial challenges (low reserves, a doubling of debt serving cost and close to a double digit per cent expense spending).

This preliminary budget of January 23 has tapped out every piggy bank on the fiscal shelf. Also demonstrated was a lack of awareness for the reserve funds, which are likely underfunded, if the current fire hall reserve of $2,417 is a good example.

Council is dealing with a $1.5 million deficit, as Powell River enters a period of extreme fiscal challenge ($70-80 million project) and are looking for public acceptance through creative accounting while steadfastly refusing to cut and/or reduce non-essential spending.

Paul McMahon, Invermere Court
Powell River

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