City council is facing a preliminary tax increase of up to 3.5 per cent as 2017 budget planning gets underway.
Myriah Foort, the city’s finance manager, said city staff is looking at a overall tax rate of 2-to-3.5 per cent to maintain base services, provide ongoing capital investment, and invest in new and enhanced services.
“This model is based on incremental increases to taxation and strategic prioritization and work plans that promote ongoing growth and enhancements to the community,” Foort said.
When forming the budget, city council has to look at a number of components.
First, the city must provide for inflationary cost increases which include contractual wage and benefit increases for RCMP and transit, utility and hydro increases, and insurance costs.
“The city’s annual cost increases are generally much higher than the CPI (Consumer Price Index) increase; however, with zero base budgeting, the budget parameters of an annual 1.5 to 2 per cent tax increase for base services provides adequate stable funding,” Foort said.
Council also has to consider how it will maintain service levels in the community, including upgrading and maintaining capital infrastructure.
Foort said that city staff has built in an annual 0.5 to 1 per cent tax increase to provide stable funding for capital investment which includes the city’s aging water and sewer infrastructure.
“This funding is focused on asset renewal and upgrading existing infrastructure assets,” Foort said.
“This ongoing capital investment parameter includes increases to operating costs related to new or enhanced capital projects.”
In addition, council also has to balance any potential tax increase with the demand from the community for increased services and amenities.
Foort said city staff has budgeted for an annual zero to 0.5 per cent tax increase, or $125,000 per year for new or enhanced service levels.
However, that can be changed as council goes along during budget deliberations which are coming up in December.
“If the city realizes an extraordinary revenue such as a high construction year and related increase in non-market change revenues or other additional revenues not yet considered in base budget, the parameter could be increased,” Foort said. “Alternatively, if the base budget has a decrease in revenues or unexpected cost increases over the expected base budget forecasts, this could limit the ability to offer new or enhanced services in that year.”
Like in 2016, council is planning to continue on with a 10-year financial plan next year to avoid short-term, large variations in tax rates.
Last year, council approved a 2.45 per cent residential tax increase for 2016 and, according to budget survey conducted by city staff, council wants to keep taxes low.
“Council provided clear direction through the survey that they were not willing to have high tax increases and they were ready to move past short-term decision making or one-year budgeting, and move towards long-term strategic financial planning,” Foort said.
Council will form next year’s budget, including determining official tax rates, during financial planning meetings scheduled for December 5, 6 and 7 between 9:30 a.m. and 3:30 p.m. at City Hall.
Prior to that, council will hold a pre-budget Committee of the Whole meeting on Nov. 8 when city staff is expected to present business cases on key Service Level Change Requests and capital projects for the 2017-2026 financial plan.