Council is wrestling with the decision to raise taxes or eliminate city services in order to erase a $1.59 million deficit.
The Catalyst Elk Falls mill closure and a new RCMP contract are the most significant factors in a tough 2011 budget.
The city is feeling the impact of a $1.37 million reduction in taxes collected from Catalyst plus a further reduction of $350,000 as a result of decreased hydro consumption by the mill.
The RCMP budget, which is negotiated by the federal government, has increased $335,000 over last year, a big tug on the city’s purse strings.
“This is a very difficult year for council,” said city manager Andy Laidlaw, during financial deliberations on Monday. “Money is short at this time. People have asked why taxes would go up and there are essentially two areas why – a demand for new services with increasing costs and declining revenues.”
To balance the city’s $65 million budget council has two options: Cut services or raise taxes.
City staff have already made several cuts in five different departments, freeing up $1.80 million, and there’s not much more left to cut.
“If council chooses to further reduce operational budgets, it is recommended selected services be discontinued,” said Laidlaw.
That leaves a tax increase.
Laidlaw has created one model with an eight per cent tax increase across all tax classes, or a 13 per cent increase for residential taxpayers.
That would result balancing this year’s budget as well as making up for another anticipated budget shortfall in 2012.
Another option is a two per cent increase across the board, or a 6.55 per cent increase to the residential taxpayers, but Laidlaw said that would only remedy the 2011 budget deficit.
What that translates to into property taxes would vary because the tax is determined by multiplying a home’s assessment – as determined by the B.C. Assessment Authority – by the tax rate.
The city is not the only body that determines the tax rate; the school district, Strathcona Regional District, Regional District Hospital, Vancouver Island Regional Library, Municipal Finance Authority and B.C. Assessment Authority all play a part, but city taxes make up 50 per cent of total property taxes.
Residential taxpayers make up 60.3 per cent of the city’s tax base, with the business class contributing about 21 per cent, followed by major industrial at 15 per cent.
In a 2010 survey of 16 municipalities across B.C., Campbell River had the 90th highest taxation rate.
Per capita, Campbell River taxpayers dole out $786 a year while Mission and Penticton, with similar sized populations, pay $706 and $741 in municipal taxes respectively.
Coun. Ziggy Stewart assured those in attendance at day one of financial deliberations that council, “is putting a lot of work into this (budget).”
Mayor Charlie Cornfield said this budget is the most significant he has worked on during his 12 years on council.
“Our actions over the next few days will determine how Campbell River goes into the future,” said Cornfield.
“We have to decide whether we go forwards, backwards, stay the same or invest in our future.”
Financial talks continued Tuesday after the Mirror went to press and resume today and Thursday from 9 a.m. to 1 p.m. daily.