City of Powell River councillors were presented with the 2023 to 2027 financial plan assumptions, with the recommendation that city services funded in 2022 form the basis for 2023 services.
At the August 25 finance committee meeting, chief financial officer (CFO) Mallory Denniston outlined the assumptions report, financial plan timeline and public consultation process to be used in the preparation of the financial plan.
“The 2023 process starts by using historical assumptions in information included in previous plans,” said Denniston. “In other words, the starting point for the financial planning process is the 2023 budget as approved in the 2022 to 2026 five-year financial plan.”
In terms of planning, the financial plan will allocate resources to those city services included in the 2022 financial plan until council identifies desired changes to service levels. It also assumes the status quo for Catalyst Paper Tis’kwat mill until December 2022, when BC Assessment will provide a further update.
In reviewing 2023 revenue and expenses, the forecast for variable property tax collection is $21,065,656, which is $888,682 more than the 2023 collection. This amounts to 4.4 per cent, which, said Denniston, is the starting point if current service levels are maintained.
“It’s worth noting that to make a zero per cent increase, would mean finding $888,682,” said Denniston. “With our current cost structure, 60 per cent of our operating expenses are labour.”
She said most of that is for the Canadian Union of Public Employees and International Association of Fire Fighters, which are contractual rate increases that have been negotiated.
“As well, we are faced with unprecedented inflation and interest rates increasing on debt that we are taking out, so these are factors that are out of our control,” said Denniston. “If there was an appetite for zero per cent increase, it would mean service cuts, because these cost increases are not in our control.”
Denniston said if direction is given to maintain the current service levels, the next steps before the November 24 draft one financial plan include consultation with departmental directors to review their budgets.
She said that although the total tax could increase by 4.4 per cent, it is not a linear relationship between the total tax levied and the tax increase on an average single-family dwelling. She said on the average single-family dwelling, the value will be slightly higher. The 4.4 per cent increase in the total municipal tax levy translates to a 5.3 per cent increase in residential taxes, she added.
Denniston recommended that her report be received for information and discussion, that the financial plan timeline be approved as presented, that a public consultation process be initiated, and that city services funded in 2022 form the basis for the services funded in 2023.
Councillor Cindy Elliott said she was struggling because the city is planning on maintaining services and has to increase taxes every year by about five per cent.
Mayor Dave Formosa asked if on top of the increases that Denniston noted, whether sewer and water had to be added.
Denniston said that is the total amount needed to be levied through property taxes.
Formosa then asked if the debate on the financial plan would be for the new council, which will be elected October 15, or the current one.
Chief administrative officer Russell Brewer said it will be for the new council.
Formosa said council was beaten up for high taxation, but people who pay taxes in the city need to understand that a one per cent increase in taxation only brings in $175,000.
“We’re doing everything we are doing on a very limited amount of new revenue coming in every year,” added Formosa.
The committee gave unanimous consent to support Denniston’s recommendations.
