The pain of a large tax increase expected this year may linger for a few more years going forward.
Campbell River City Council is currently deliberating on a draft budget for 2023 that is proposing a 11.27 per cent raise in municipal taxes. Whether it will actually be that much of an increase will depend on whether city councillors and staff are able to find costs savings or revenues somewhere.
But whatever tax hike city council settles on after this week’s budget deliberations, it will still be a larger than average increase and taxpayers will have to be prepared to bite a similar-sized bullet for each of the next 2-3 years.
“While 2023 has been identified as an outlier year due to a number of large one-time changes to revenues and expenses, we also are anticipating 2024 and 2025 will need to be prepared outside of parameter as well based on current forecasts,” city finance controller Aaron Daur told council during the first day of 2023 budget deliberations on Tuesday, March 7.
The proposed tax increase for this year is being termed an “out-of-parameter” tax increase because it contravenes council’s policy to not go beyond 1.5-2.0 per cent with base budget tax increases.
This is one of the largest proposed tax increases in recent years. The 2022 municipal budget imposed a 3.13 per cent tax increase.
Circumstances have forced the necessity for a large increase this year to cover the base budget and new expenditures. Those circumstances have been identified as “financial Big Rocks,” using Campbell River’s landmark waterfront boulder as a metaphor for the big ticket financial items the city faces, such as a large increase in RCMP costs due to a first-ever wage settlement the police force and the federal government has agreed to. High level of inflation, supply chain-induced cost increases and other increased expenses are having a big impact on the city’s budget as well.
But this year’s budget won’t be the last one to propose an out-of-parameter tax increase. Forecasts suggest that the 2024 and 2025 Financial Plans will require an out-of-parameter increase as well, council was told.
The factors that forced a proposed 11.27 per cent tax increase for 2023 were more one-time changes, Daur said but the factors impacting future tax increases in 2024 and beyond “are more pervasive and rooted within key areas of the city’s operating budget.”
Identified factors anticipated to impact future tax increases are:
- RCMP body worn cameras
- Increased wages and benefits from the settlement of collective agreements
- Settlement of the new RCMP collective agreement
- Revenue loss associated with library redevelopment
- Debt servicing
- Various other misc. items
Daur noted that these are forecasts and actual results could be substantially different than presented.
Council continues to discuss the 2023 city budget this week at council chambers in City Hall. Proceedings can be followed via a webcast as well. The budget deliberations are expected to wrap up on Friday, March 10.