by Larry Scherck Editor's note: The amount of funding decifit in basic pension benefits in the municipal pension plan has been corrected in the following viewpoint.
I had decided to write this letter about a month ago, but for a number of reasons I changed my mind—until mid-July when the City of Detroit declared bankruptcy and my research seemed a bit more relevant.
After reading the letter from City of Powell River Mayor Dave Formosa that accompanied our 2013 property tax notice, I was left with the impression that our property taxes would increase in the range of three to 3.8 per cent. I was comforted by the ability of the city to hold our tax increase to something close to the Canadian average inflation as measured by the Consumer Price Index (1.52 per cent in 2012).
However, when I looked at our personal 2013 property tax notice I found that our increase from 2012 was 7.77 per cent, for an average home in Westview. I searched for the reason behind the discrepancy by looking at each of the itemized categories on our notice and their individual increases from 2012. There were two increases that stood out from the rest—general municipal went up 17.14 per cent and Powell River Regional District went up 14.56 per cent. Was this just a one-year anomaly or was it a trend? I went back six years, to our 2007 property tax notice, and compared it to our 2013 property tax notice. Again, there were two increases that stood out—general municipal went up 165.36 per cent over the six years for an average of 27.56 per cent per year, and Powell River Regional District went up 68.99 per cent over the six years for an average of 11.51 per cent per year. All this occurred when Canadian inflation averaged 1.84 per cent per year for the six years 2007 to 2013.
Looking for further answers, I had a look at the last audited financial statement for the city, 2012. Again, a couple of entries concerned me. The first was the schedule 20 financial activities—by segment showing that the city’s total operating and debt expenses exceeded total revenue by $581,387. The second was under the notes to the consolidated financial statements; article 7; contingencies and commitments. It shows that the municipal pension plan has a $1,024-million funding deficit in basic pension benefits and that the city paid $833,252 for employer contributions to the plan in fiscal 2012.
As a taxpayer, I am concerned about the sustainability of the trend that has appeared over the last six years. What is the solution? Does the city increase its revenue by even higher property taxes (already at several multiples of inflation), or is there some other income stream in the future? Does the city decrease its expenses? Are the taxpayers responsible for the underfunding of the pension plan?
Larry Scherck is a concerned citizen living in Powell River.
