Residents facing potential ‘tax shock’

The city needs to “pare down” or run the risk of having to make some “mildly radical” changes, according to a city councillor looking at this year’s pre-budget figures

The city needs to “pare down” or run the risk of having to make some “mildly radical” changes, according to a city councillor looking at this year’s pre-budget figures.

“The only other way around this is looking at the level of services we provide this city,” Coun. Roy Grant said. “Citizens are going to be in for a real shock if we don’t reconsider. We’ve either got to pare down considerably or we’re looking at some mildly radical solutions to the problems here.”

Coun. Claire Moglove said reducing services is a balancing act.

“When you talk about cutting services, you have to be careful you don’t cut out too much and become a city without a soul and that won’t attract new business,” she said. “While I agree to a certain extent that some service reductions have to be done I’m of the view we have to be very careful.”

City staff already cut $1.803 million from the budget by reducing expenditures in five departments.

Additional cuts “will result in reduction or elimination of services which will directly impact personnel and positions,” said Laura Ciarniello, city manager of corporate services.

The city is projected to spend $35.89 million in 2011, a reduction of $1.5 million over last year.

But revenues continue to fall, leaving the city with a $1.59 deficit largely as a result of the Catalyst mill closure.

“The impact from Catalyst is significant,” said city manager Andy Laidlaw, and it’s worse than expected.

Last month, the city estimated it would lose $1.37 million in tax revenue with the shutdown.

But an additional loss of $350,000 in utility revenue from decreased hydro consumption by Catalyst has the city out $1.7 million.

To make matters worse, Catalyst tax revenues will be reduced further in 2012 by anywhere from $250,000 to $500,000, according to Laidlaw’s budget options report.

At Tuesday’s council meeting, staff presented council with options it can take to help balance the budget.

Raising taxes by four per cent across all tax classes, with council reserving another four per cent increase towards the 2012 budget, was one method Laidlaw presented.

Coun. Grant would like to see taxation ratios altered slightly, to more evenly distribute the financial burden between the tax classes.

Currently, 20 per cent of the city’s tax revenues come from business, or about $4 million, whereas close to $15 million comes from residential.

“My contention is that we share the load somewhat equitably,” said Grant. “Some businesses in our community are suffering from the downward trend in our community but a lot of citizen taxpayers are suffering as a result of the downward trend as well.”

Grant said he would like to see consideration given to increasing the business portion to anywhere from 20.5 to 21.5 per cent.

Coun. Andy Adams noted many businesses in Campbell River are hurting and doesn’t think it would be fair to raise their taxes.

“I don’t think there’s any room for an increase in the business tax at this time,” said Adams. “I think it would also make it difficult in attracting industry that may want to invest in Campbell River. That leaves residential taxes or cutting services.”

The impact of a four per cent increase on an average home, assessed at $268,000, would be $39 which would generate $508,000 of new money for the city.

An eight per cent increase would cost a home owner $85 more and bring in $1.106 million.

Mayor Charlie Cornfield said he was not prepared Tuesday night to go ahead with any percentage increases until council knows what they mean in real dollars to home and business owners.

Another option is to use a one-time $277,000 accumulated account surplus and Strathcona Regional Tax Levy worth $611,000 to reduce the 2011 deficit to $702,000 but councillors Adams and Moglove suggested it would be prudent to save half of those funds and put them towards the 2012 budget.

City council will discuss the budget and make its final decisions March 28-April 1.