Council softened a new tax regime Monday for the utilities class after hearing about one company’s difficulty in trying to come up with extra money on short notice.
Capital Power made a presentation during council’s financial planning session to describe the challenges council’s 77 per cent tax increase would pose because the company has already done its budget for next year.
The proposal was to hike taxes by 26 per cent in year one, 20 per cent in the second year and then by 17 per cent in the third and final year.
“We first learned of this proposal in late November, long after we’d finalized our budget for the facility in 2014,” said Greg Manzulenko, plant manager at Capital Power. “We simply did not expect an increase of this magnitude, and don’t have enough time to plan for how we can fit an increase this big into our 2014 operating budget.”
Coun. Claire Moglove was sympathetic and made a motion, which council passed, to have the first year of the increase be one-half of the increase in the three subsequent years.
Under that structure, taxes will likely jump by around 11 per cent in the first year.
Manzulenko said while the sudden notice is challenging, the company does understand the need for the tax increase.
“We support (the city’s) recommendation to raise utility taxes over time from the current rate of $17.23 to the new rate of $30.50,” he said. “We believe everyone should pay their fair share, and we’re willing to do our part.”
However, Capital Power asked council to consider spreading the increase over five years rather than three years, which would mean a 12 per cent increase every year for five years.
The majority of council, however, thought it was a reasonable compromise to raise taxes next year with the smaller increase.
Moglove said she was impressed with Capital Power’s willingness to help.
“I really appreciate them coming to council and not simply saying ‘there shouldn’t be a tax increase,’” Moglove said. “They came to council and said ‘we understand there should be an increase and we want to pay our fair share, however for 2014 it’s going to be extremely difficult to absorb this.’ So I think it’s a reasonable compromise.”
Meanwhile, council also approved a tax increase over three years for managed forest lands. The rate will be set at the average tax rate charged by other B.C. municipalities.
The city has had historically low rates compared with other B.C. communities and while it has more managed forest lands than any other B.C. community, it raises less money from that tax class than other Island municipalities.
TimberWest, which pays taxes to the city of Campbell River, wrote a letter to council charging they have not been properly informed of the changes.
“The city has a duty to consult regarding the proposed financial plan,” wrote Anna Fung, vice-president of legal and general counsel. “TimberWest is an affected ratepayer and is entitled to be consulted in this process. The opportunity to attend the financial plan meetings on Dec. 9 and 10 to comment on the plan for five minutes is neither meaningful nor sufficient consultation.”