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Campbell River mayor says council still over spending

And TimberWest fumes over increase in managed forest lands tax rate

Taxes are going up 2.92 per cent for residential taxpayers this year.

That equates to a $41.26 per year increase for the average Campbell River home assessed at $257,000.

There will be no tax increase for the business class and the parks parcel tax will remain at $25 for 2014.

Council spent a full day Monday shaping the city’s capital budget – which includes some big ticket items – without changing the tax rate which was settled on during the last budget session on Jan. 20.

“All of the decisions made today (Monday) do not involve any taxation increases so we are still ending at 2.92 per cent,” said Myriah Foort, the city’s finance manager.

Mayor Walter Jakeway said while it may look like good news, the reality is council is still overspending but instead of using taxation, is quickly depleting reserve accounts, which once empty, will force council to raise taxes even further.

“The low percentage increase gives the impression that city spending is restrained and is finally under control,” Jakeway said. “City spending is not reined in. When there is in excess of $14 million of capital spending from reserves (savings accounts) all in one year, something is very wrong. $14 million of reserve spending is similar to a one-time 78 per cent residential tax increase. It is just hidden and out of the public’s view, because the money comes from the savings accounts.

“Yes, some of the accumulated reserve monies are from gaming income and some come from gas taxes, but most comes from past city taxes,” Jakeway added. “It is all taxation and it all comes from the taxpayers regardless.”

One of the biggest decisions council made was to increase the tax rate for the managed forest lands class, despite objections from TimberWest that raising taxes was contravening the Private Managed Forest Land Act, which provides landowners with a tax benefit in exchange for sustained harvesting.

Terry Francis, operations manager with TimberWest, told council Monday morning that a prior court ruling by BC Supreme Court reinforced “that a municipality cannot tax private Managed Forest Land at a rate which has the effect of restricting a forest management activity.”

Francis also pointed out that the city’s proposal – to increase taxes from $2.29 per thousand to the provincial average of $13.98 per thousand – may cause forestry companies to re-think their operations in Campbell River.

“The proposed increased tax burden will likely discourage forestry and remove the financial incentive to carry out forest management activities,” Francis said. “If implemented, a prudent timberland owner might be forced to harvest the operable timber without replanting.”

Francis also noted that he believed the city is legally restricted from setting the tax rate for managed forest lands higher than the rate Merrill & Ring Managed Forest land is taxed.

Al Kenning, a financial consultant working for the city, disagreed.

“Staff and the city solicitor do not agree with TimberWest that the city must charge TimberWest the same rate it charges Merrill & Ring,” Kenning said. “The rate for Merrill & Ring land is set by provincial order that specifically only applies to Merrill & Ring and does not apply to TimberWest.”

Kenning also disagreed that raising the tax rate contravenes the Private Managed Forest Land Act.

“Our view is that when this matter was considered by the BC Supreme Court, the court ruled that it was improper for the city to use tax rates to bring about a change in land use,” Kenning said. “This is not what the city is proposing. The court did not actually rule on whether any tax increase contravenes the Private Managed Forest Land Act in our opinion.”

Council, taking staff’s advice, followed through on the tax increase which will be phased in over three years, starting in 2014. The increase will generate $33,926 in the first year.

The utilities tax class will also see a tax increase and it will be phased in over four years, with half of the first year’s amount ($52,568) applied in 2014 and the remainder spread out through 2017.

Council’s five-year plan includes some significant sewer and water infrastructure projects and involves borrowing up to $15 million for sewer and water, to be paid back over 15 years.

Jakeway warned that council’s spending and borrowing will hurt in the long run.

“The 2015 council is going to inherit a huge amount of pain and will have to take extreme measures to rectify the financial situation without harming the taxpayers.”

Highlights of the

city’s budget:

  • Airport fueling facility-$600,000.

  • Ladder fire truck replacement-$500,000.

  • Sidewalk infill on 15th Avenue between Maple and Spruce; on Spruce between 14th Avenue and Highway 19A; and west of Petersen on 14th Avenue-$350,000.

  • New traffic lights. First priority is the Petersen and 14th Avenue intersection-$250,000.

  • Argonaut Road repaving-$260,000

  • Norm Wood Environmental Centre upgrades-$1.85 million.

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