City of Powell River’s finance department has been given direction to work with a five-year financial plan scenario for the coming year, increasing residential and lowering commercial taxes.
At a special financial meeting on February 8, chief administrative officer Adam Langenmaier presented the second draft of the 2021 to 2025 financial plan for information.
Finance committee chair councillor George Doubt said the business on the table was to receive a report from Langenmaier and choose one of the five scenarios outlined in it to complete the financial plan.
Councillor Cindy Elliott said the third scenario Langenmaier had proposed provided the best option for this year going forward. She said the scenario used some of the money from the city’s COVID-19 funds to reduce taxes on the business community that has the need for some breaks.
“It was a really good use of those funds to lower those taxes in comparison to the rest of us,” said Elliott.
The third scenario for the 2021 tax year features an actual total tax increase for residential of five per cent when factoring in changes such as reduction of flat tax and increases to sewer utility. For commercial properties, the scenario proposes decreases of 1.9 per cent.
Councillor Rob Southcott said he was on the same page as Elliott. He said he thinks he understands how small businesses ended up with a seven per cent increase last year but he thought that needed to be compensated for.
“There’s quite a bit of hardship in that community,” said Southcott. “The only thing I can see that we can really do is ensure we hold taxes back on small and medium-sized businesses. These are the people who allow our local economy to flourish.”
Mayor Dave Formosa said he, too, was in favour of scenario three.
“I think we were all quite shocked when we saw business at seven per cent,” said Formosa, referring to the previous year’s increases.
Formosa said the effect on the average homeowner in the scenario is five per cent, including increases in utilities. He said the reduction being proposed for commercial sends a good message that the city realizes how high taxation is on businesses.
Councillor Jim Palm said he wanted to thank Langenmaier for building a couple of scenarios that have lowered the hit on residences and commercial properties. He said there is a need to give commercial properties a break in these times.
Palm asked about what the proposed flat tax reduction was. Langenmaier said the figure in 2020 on a residential property was $180, and it’s reduced to $115 in 2021.
Palm said that puts taxation burden onto residents whose homes are higher than average value. He then asked about the increase on sewer utilities. Langenmaier said it was about a $53 increase this year. Palm said there was also an increase for garbage.
“They all add up very quickly for the above-average-cost home,” said Palm, who favoured council advocating for the second scenario, where the tax increase for the average single-family home would be four per cent, inclusive of all municipal taxation and utilities. The commercial rate under that scenario is a reduction of 1.9 per cent.
“In these COVID-19 times, I do not want to tax homeowners who are hurting, along with business,” said Palm. “I strongly advocate for scenario two to keep the taxes reasonable because we know the regional district taxes are also going up.”
Doubt said he thought scenario three, which other councillors were advocating, was a reasonable solution.
“I know all of the scenarios end up spending money from reserves,” said Doubt. “It means in the future we will have to rely more heavily on tax increases to do capital projects, or increase debt, and I hear a considerable number of people resisting the city having increased debt. Those things are going to have to come if we are going to keep the levels of services the same.”
He said scenario three keeps services at the same level as they have been in previous years.
“We do need to be aware we are reducing reserves and we are pushing costs we know are going to happen down the road,” said Doubt. “We are spending more money than we are taking in.”
Council voted for the finance department to proceed with scenario three, with Palm opposed. Under the scenario, the 2021 impact on an average value single-family dwelling of $383,833 is a total increase in taxation inclusive of all municipal taxation and utilities of $149.71, or five per cent, to $3,146.80. For the average commercial property assessed at $391,000, there would be a decrease of $145.16, to $7,512.12.
