A five per cent tax increase on Powell River property owners is being considered by City of Powell River council.
“There is where we have to make a hard decision both by increasing taxes and reducing services to ensure the longevity of this community,” said city chief financial officer Adam Langenmaier.
According to Langenmaier, the impact a five per cent property tax increase will have on the average single-family dwelling in Powell River for 2019 would be $71.70. The 2018 levy was $1,588.84 and the proposed 2019 levy would be $1,660.54.
In his report to the city finance committee on Thursday, January 24, Langenmaier said the hike is necessary to provide services to residents and replenish depleted reserves by injecting $500,000.
“Big things are occurring that are pushing the boundaries and controls of this city,” said Langenmaier.
The biggest among them is city wages, which are estimated to increase by $750,000 just to provide current services to residents.
In 2018, the city paid about $12.9 million in wages. According to Langenmaier’s report, it is expected that the city’s wage expense will increase by 5.8 per cent due to collective agreement negotiations, the new Employer Health Tax, rising medical benefit costs and increases to Canada Pension Plan contribution rates.
Other items identified in Langenmaier’s report that will have a significant impact on the 2019 financial planning process include $45,000 for a byelection due to the recent Supreme Court of BC election ruling; $72,247 that will come from reserves if a federal/provincial grant is approved for improvements and upgrades to Powell River Recreation Complex; and an estimated cost of $123,000 for remediation of the Hemlock Street loop.
Regarding the Hemlock expense, city chief administrative officer Russell Brewer said he is confident the $561,000 cost estimate made in a report to council on December 6 can be accomplished for less.
“The $123,000 is the estimated cost for actually meeting the remediation order,” said Brewer. “The additional cost estimates that were in that report included some worst case scenarios of providing access to subdivision.”
Langenmaier said the $500,000 for the reserve funds is to start saving now for future big-ticket items such as a new Powell River Fire Rescue fire hall.
“With the work that is being performed to find a suitable replacement for the current fire hall, it is prudent to start taking steps to fund the replacement of the building to reduce the city’s reliance on debt when the project comes to fruition,” said Langenmaier.
City councillor CaroleAnn Leishman said the city has done poorly at putting money in some reserve funds.
“As much as I hate saying we’re going to have to increase taxes, we’re going to have to increase taxes,” said Leishman.
The city has been able to tie its tax increase to the Consumer Price Index (CPI) for the last three budgets.
“That's dreaming, I'm afraid, but we're draining our reserves; we can't do it anymore,” said finance committee chair Rob Southcott. “There's two things we can do, raise taxes or cut services. We'll probably do both.”
Mayor Dave Formosa said a five per cent increase is probably warranted but too high, and added that he thinks keeping in line with the CPI, estimated at three per cent, is doable.
“I'm sure that the five per cent makes sense but is it tolerable to citizens?” said Formosa. “I don't think so, but I think we can sell a cost of living because don't forget the five per cent they're asking for doesn't include the increases in water and sewer.”
Langenmaier was directed to bring back a financial plan in February with no more than a five per cent increase.
“Adam takes that as the goal post, develops the details and we start taking our hatchets to the detail,” said Southcott.
