A preliminary 2011 budget report to council reveals the city is projecting a $2 million operating deficit.
The city is estimating expenditures of approximately $68 million this year with $28 million to be spent on airport, water, sewer and general capital fund expenditures and $37 million to go towards general operating costs.
The city has budgeted for $35 million in general operating revenues, leaving the city with a $2 million gap.
The deficit is mainly the result of an increase in the cost of garbage, recycling and yard waste programs, an increase in police service rates and the closure of Catalyst Elk Falls Mill.
In November, Catalyst was awarded a closure allowance meaning the cost of improvements, such as buildings, will be reduced by 10 per cent. The BC Assessment Authority, upon inspection of the mill property in late November, also determined the assessed market value of the land has decreased by $35 million. As a consequence, Laura Ciarnello, the city’s general manager of corporate service, said the city is set to lose $1.36 million in taxation.
“If the tax rates were to remain unchanged from the 2010 rate this would see that taxes collected from Catalyst decrease from $3.39 million to $2.02 million,” said Ciarnello in a report to council. “Staff will be seeking direction from council as how to address this situation. Options include absorption of this reduction by the other tax classes, increase in taxation to the major industry class, reduction in operating expenditures or a combination of these options.”
Also affecting the numbers is reserve revenue which is estimated at just $593,300, way down from last year’s $2.8 million.
Ciarnello said the figure is a reflection of the fact the capital portion of the city’s budget has not yet been processed. Ciarnello said once the departmental managers’ budgets are processed there will likely be increased draws from the reserve accounts.
Council’s financial plan deliberations are scheduled for the week of March 28 over a span of four days. To help council in their decisions there will be opportunities for the public to get involved Feb. 23, 24 and March 4 through open houses and neighbourhood meetings and at the beginning of the Feb.15, 22 and March 1 council meetings.