Draft budget works with tax increase

City Manager Andy Laidlaw made a presentation to city council at Tuesday’s meeting to discuss next year’s budget

City staff will prepare the preliminary 2012 budget with a residential tax increase.

City Manager Andy Laidlaw made a presentation to city council at Tuesday’s meeting to discuss next year’s budget.

His budget presentation assumed a zero per cent tax increase to the business sector but a 3.75 per cent increase in residential taxes, a $45 increase to the average homeowner.

That percentage increase reflects what taxes would need to be at in order to continue with the level of service the city currently provides. However, that figure is not set in stone and council will make an official decision on the tax rate early next year. If council chooses not to increase taxes, then it will have to make significant cuts to services, according to Laidlaw.

“Residential taxes have been going up for some time on an incremental basis,” Laidlaw said. “This is a shift away from industrial to residential. The status quo is you’ve been relying on industrial taxation for some time and there is a need to make the shift to reducing services or a shift on to the residential sector, which are the major consumers of services.

“Your role is to assess the competing values,” Laidlaw told council.

As of Dec. 13, 2011 the city is facing a structural deficit of $550,000 for 2012, that’s an improvement from the original forecast of a $1.85 million deficit.

Laidlaw said a $130,000 reduction in the new RCMP contract; $150,000 in cost reinstatements; $615,000 in inflationary and wage increases; and $400,000 in Catalyst taxation has improved the city’s financial picture. However, he warned the estimated deficit of $550,000 could still rise, depending on Catalyst.

“There will be a decrease in Catalyst taxation revenue – unknown at this time,” Laidlaw said. “Council has been informed they (Catalyst) are seeking a reclassification (of the mill site property) to business class from the BC Assessment Authority. Any reduction in Catalyst assessment will directly affect the 2012 budget by the same amount.”

Laidlaw said he expects to have a preliminary draft budget before council by late January, but in order to do so he told council Tuesday night that he needed direction on taxation levels.

Coun. Claire Moglove said that was too difficult without knowing what to expect from Catalyst.

“I know staff are looking for some kind of direction tonight but there’s so much unknown, it’s really hard,” Moglove said. “If BC Assessment comes back and concurs with Catalyst it could change things so drastically. It’s such a big piece of the puzzle.”

Coun. Ryan Mennie agreed it was too soon to ask a new council to make any financial decisions.

“There’s certain information you’re looking for but that certain direction we need to find as a group and it’s not coming from tonight,” Mennie said. “This is a new group and this is our first meeting other than last week’s inaugural meeting.”

Laidlaw said “unfortunately the uncertainty is something (he has) to factor into the budget so (he) can starting building the budget to at least have a building block for council.”

Mayor Walter Jakeway suggested city staff proceed with the numbers Laidlaw presented to allow staff to carry on with the budget, even though tax percentages are not yet official.

“If it helps, I would suggest you carry on with the 3.7 per cent,” Jakeway said, which was supported by council.

 

 

 

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