With less than ten days remaining until the district is required by law to have its tax rates set and submitted to Victoria, council has finalized its budget.
After months of discussion, and concerns over a possible 13.5 percent tax hike, this year’s budget sees a hybrid approach.
At the April 22 budget meeting, council voted to use a portion of reserves to cover the revenue shortfall. At the time, it would have been $292,000 of reserves, something that mayor Krakowka was firmly against.
“I have issues with that,” he says. “Previous councils have always made sure those reserves were built and always contributed to for when we have to do big things whether that’s asphalt, water lines, sewer lines… anything under our roads. It’s very important to continue that process. All of our infrastructure is exactly the same age, and that’s a concern. It might mean major construction.”
Budgeting expert Michael McPhail, who has been helping council with this year’s budget says that taking money out of reserves is simply delaying the pain. “You could do that for certain capital proposals,” he says. “If you look at the next two years, you still have big increases of five to six percent. There’s three years of pain, but your reserves are very strong. I think it would be a good idea to look at the long-term use of your reserves.”
Councillor Gulick points out the $1.1 million council is short on this year is basically the amount of this year’s collective agreement increase. “I’m comfortable using that this year, knowing that next year we need to be diligent in our capital spending.”
Councillor Hofman says that if that amount is taken out to cover the collective agreement, next year’s taxes will need to go up to cover the 6.5 percent increase expected for next year, as well as the $1.1 million that was covered with reserves this year. “We’re still having to pay for this year’s increase. It may not be exactly because some of it was back pay but it’ll still be a very large chunk.
He points out that Tumbler Ridge has some of the lowest tax rates in the region. “Fortunately we have some businesses to help us keep the residential tax rates low, but every year we defer is another year we’re going to have to make up.”
He says last year, when residential taxes only went up about half of other municipalities in the region, he was happy, but he says he would like to see the town going. “The summer student program is not make work projects for young people. There’s a lot of work that needs to get done to keep it clean. Let’s not defer. Let’s take our hit this year so next year we don’t have to do another double digit tax hit, because I think if we’re going to force it down to 6.5 percent this year there’s not going to be any way to get it below 10 percent next year.”
Mayor Krakowka says that 13.5 percent sounds like a lot, but the highest assessed home in town would only see $170.78 more in taxes.
Councillor Norbury says he thinks about the rising costs of living: “It costs more to do everything. It costs more to fuel our vehicles. It costs more to buy…whatever. I think it’s our responsibility to do what we can to keep additional costs for residents low and keep our service levels at a point that residents are willing to pay for. If we start raising business taxes, that just trickles down into the cost of goods. Maybe I’m being a little alarmist, but if costs go up in town, Amazon’s right there. I don’t want that to happen I want to keep our community cost-effective for residents and for businesses. I think we really need to do all that we can to reduce our taxes to a reasonable level.
If $292,000 was used from reserves to cover the budgeted shortfall, it would have dropped the tax rates to an eight percent increase to taxes across the board.
However, that number is now sitting at 10 percent for everything, except utilities, which are limited by law to a set amount, in this case, 6.5 percent.
That decision happened at the April 29 council meeting, as minds shifted. At the start of the meeting, council was looking at an eight percent increase to taxes.
Councillor Hofman suggests council consider this year’s tax increases with an eye towards next year. “I would like to discuss perhaps setting a target for a maximum increase next year. For example if we were to say nine percent this year and whatever we needed to take from reserves to cover that, with the intent to hold tax increases in the nine percent range for next year as well. I understand the concerns about our residents being able to take these hits, and I think it’s if we give them the heads up and let them know to plan for it, it might be less of a hit next year. I would hope that with two years in that range that we would be back to a more sustainable taxation level, but one way or another, we’re going to have to pay for the increased wages and increased costs.”
After having a week to think about it, Councillor Gulick says there isn’t really an easy answer. “We can’t always get what we all want or what we think is fair and that’s tough.”
Councillor Klikach says the other thing council is forgetting is that not only does pulling money out of the reserves mean that money is no longer available for big projects in the future, but that the money is currently invested. “Any money that we take out of the reserve for anything is going to lose us the five percent interest we are making,” he says. “I can’t vote for reducing the taxes this year. I think we should be charging what we need to keep this town in good condition.”
He’s also not a fan of the fact that council is micro-managing the district directors. “We’re telling our directors what they should be doing when you ask them to make a list like that. It should be up to them to decide. If you want to save ten percent across the board, we should tell them to cut their budget ten percent, and let them go out and do it. They’ll know how to do it so it benefits everybody. I just think it’s wrong to ask them to spend a whole bunch of time to make up a document and then have to listen to us cut it to pieces, then have to go back there and see if they can fit it all in. If you want five percent cut, ask them to cut five percent from their budgets. They’ll know where they can do it.”
Councillor Norbury says that’s why he’s proposing to use reserves and not asking the directors go and cut from their budgets. “They come up with the number that they need and they present it to our CEO and they present it to us. I have no doubt that all directors have looked at their budgets to try and give us the most cost effective number that they can to operate without cutting services. I believe them. I trust them. I support them. I would rather see them not have to cut services. We have $37 million in the bank and we should utilize that to preserve our operations.”
Councillor Hofman says the district needs to get the tax rates to the point where the town can do what it needs to do. “We didn’t raise taxes in 2020 or 2021. In 2022, we raised taxes 3.5 percent.We’ve been kicking this can down the road for five years now. I can understand not wanting a 13.5 percent hit, which is why I suggested going to nine percent; then we can say to our residents we’re not going into double digit tax increases, but we are going to be at that nine-ish percent until we catch up. We’re handcuffing ourselves if we try and stick to 6.5 percent. I was really proud of 5.46 percent last year and now in hindsight I’m looking at that and thinking ‘if we had done eight last year, we wouldn’t have been at 13.5 percent this year.’ We would have been around ten percent this. What I really don’t want to do is keep kicking that can down the road anymore and for me, I understand where you’re coming from councillor Klikach, but if it takes a couple of years at ten percent to get us to a point where we can be comfortable, where we can run our operations as we want and we have the service levels we want, I’m okay with that.”
He says he’s good with 13.5 percent, but he doesn’t feel there’s enough support from council. “We need to go as high as we’re comfortable with and we’re going to have to do that for at least another year.”
Councillor Klikash was the one to float the ten percent figure. This figure means that council would still be taking from reserves, but only $157,000, far less than the $292,000 originally voted on.
“I like the idea of a ten percent tax rate increase,” says Councillor Noksana. I mean, I don’t but this cuts in half what we’re taking from reserves and decreases the increase to taxation. It is a bigger hit than we all expected or would like this year, but if we don’t increase more than we’re comfortable with, we’re going to be sitting in the same spot just as frustrated or more next year.”
Councillor Duseault says she has heard from residents. “They say ‘if you’re going to raise the taxes, just do it. Stop cutting everything. Just do it. I like ten percent. We’re not going to please everybody, but ten percent is good.”
Mayor Krakowka points out that the only reduction in service levels is to some of the casual seasonal worker positions. “We have not decreased any other service within the municipality, whether that is garbage pickup, recycling or snow removal. None of those services have been touched. It’s very important to know that we have not cut any service within the municipality besides the casual seasonal workers.”
Councillor Noksana moved to set the tax rates at 10 percent for all applicable categories: residential, heavy industrial, light industrial, commercial, recreational and farm.
For the average residential property in Tumbler Ridge, valued at $172,000, it would mean paying $1024.84, or $32.62 less than the previously proposed 13.5 percent tax increase.
Again, on our average Tumbler Ridge property, residents should expect to be paying $93.30 more than last year.
The 10 percent increase to taxes does not include a previously-approved increase to water and sewer rates. It also does not include PRRD taxes as well as other taxes for the school and hospital.
The tax rate bylaw received its first three readings at the April 29 meeting of council and was finalized at the May 6 meeting.
Trent is the publisher of Tumbler RidgeLines.