With the increased loss of industrial assessments, council has directed city staff to draft a budget with a 5.5 per cent tax increase to residents and business.
“This year we face the loss of industry assessment base due to a shutdown,” director of finance Keri Bolton said, referring to the closure of Northstar Lumber.
Bolton added this loss, combined with other pressures requires, “tax increases of approximately six per cent to the average taxpayer.”
The resulting loss of municipal taxes from Northstar Lumber is $145,000 for 2011. The 2009 appeal from Quesnel River Pulp to lower their assessment rate tacks on another $180,000 in lost municipal taxes. And as this appeal is retroactive, the city expects to return about $685,000 to West Fraser for 2009 and 2010. While the city had anticipated this and has about $565,000 in a tax stabilization reserve, $120,000 from 2011 budget must be used to cover the cost.
Further, a reduction in CN Rail’s utilities assessment adds another $56,000 to the bottom line.
The estimated municipal tax need for 2011 is $12,966,000. Therefore, Bolton explained, “these changes to assessment, plus regular cost increases/reduced income would equal a six per cent tax increase.”
Another consideration the city needs to look at is increasing various reserves for future stabilization. The city currently holds two reserves – the Capital Reinvestment Reserve which accumulates funds to pay for reinvestment in roads and infrastructure and the Tax Stabilization Reserve which holds funds to cover large industrial appeals in the future.
There is also the issue of tax shifting – the city’s five-year financial plan bylaw. The objective of this bylaw is to reduce the percentage of property taxes paid by major industry tax class each year and add it to all other classes.
However, in years of a mill closure or significant change to industrial assessment, council may choose to alter the percentage shift.
“This is the toughest decision of the year,” Coun. Mike Cave said.
“We are at a point where we need to weigh the increase
versus loss of services.”
“I am in favour of a 6.5 per cent across the board, [which means] an increase of $39.60 to the average house and an increase to reserves/cuts with no tax shifting.”
Coun. Ron Paull said he is not in favour of tax shifting this year.
“Mills are on the rebound, lumber is up,” he said.
“They are launching successful appeals but I’d like to see the tax shift at zero per cent.”
Paull added he is in favour of a 5.5 per cent tax increase to residents and businesses.
Coun. Laurey-Anne Roodenburg said that she is in favour of a six per cent increase adding, “there is an opportunity to take money out of surplus to reduce this percent. From looking at the results of the Citizen’s Survey, more than 80 per cent said they didn’t want services eliminated,” she said, adding the city needs to evaluate how much it depends on industry.
“I can’t support using surplus,” Coun. Sushil Thapar said.
“I haven’t seen the spending going down. [We] can’t spend on fluff. [There are] essentials that need to be looked after.”
Coun. Coralee Oakes raised her
concern about Quesnel’s long term sustainability.
“What choices do we need to make to ensure our future?” she said.
“We need to protect our reserves.”
Oakes added the city needs to maintain viability for future generations.
“We can’t have a 63 per cent reliance on an industry that is changing,” she said, suggesting an increase of 5.5 per cent.
Mayor Mary Sjostrom was the final voice heard, suggesting a 0.25 per cent tax shift increase and a 5.5 per cent increase to resident and business tax rates. She also suggested using some of the surplus.
“If it means saving jobs and services, then we should use them,” she said.
“They belong to the taxpayers.”
Council directed staff to not exceed a 5.5 per cent increase to resident and business taxpayers. Council also voted 4 – 3 in favour of no tax shift for 2011, with Couns. Roodenburg, Sjostrom and Oakes opposed.
Figures and dollar amounts are not final until 2011 budget is complete, May 15.