Monday, April 19, 2010

The Burden Shifters

Last Monday's City Council meeting brought the city's elected officials together to try and address some of the financial concerns of the city's budgetary requirements,  an exercise of financial decision making that attempted to keep much of what they have currently in place, without having to  resort to any draconian cuts to services in order to set their financials right.

In a 4-3 split, council put forward the next five year plan for the City, with those in favour of the plan opting for a 3.5 per cent increase in taxation as part of the five year plan and a shifting of the taxation levels of that proposed tax increase between business and residential tax accounts.

Providing for a  recipe that in the short term appears to default once again to the long suffering residential rate payers, who now will find their tax bill increased so as to remove some of the "burden" from the commercial class in the city, or what's left of the commercial class.

Council chose not to accept the suggestions offered up by Councillors Thorkelson, Ashley and Kinney to seek out alternative ways of seeking relief for the business community. Apparently spooked by the growing number of empty store fronts, store closing signs and boarded up windows, The Mayor and councillors Bedard, Gordon-Payne and Garon chose to reduce the commercial tax rate, though not wishing to lose that income, they once again punched in the magic numbers that dial up the residential tax base, shifting the burden of that reassignment to the apparent default ATM for any city concerns.

What strikes more than a few residents as strange however is the apparent lack of interest in addressing some of the larger financial concerns of the moment, some of which could drastically change the financial burden for the city.

Many discussions take place around the city these days as to what the city can truly afford to continue to operate or provide.

High among their concerns an airport ferry that at last report costs almost a million dollars a year to operate in order to provide transport for three flights a day. A burden shared by all residents regardles as to whether they ever fly out of the city or not. Some locals have expressed the thought that perhaps it is time to explore the possibility of selling that transportation item off to other interests (Lax Kw'alaams for instance seems to be inclined to invest money these days and they provide the ferry service whenever the city owned one is in need of repair), they instead rely on tax dollars and occasional increases to the ferry ticket to cover the growing cost problems).

Likewise, the ongoing saga of Watson Island continues to drain much needed financials from the city treasury, yet not one word of open debate has come out from council asking the Mayor about the new strategy of counter suit against Sun Wave, a move that could tie up any hope of selling Watson Island in the short term.

Beyond that setback on the file, there has been no real explanation as to why all previously submitted bids for the industrial site were turned down. All unusual moves considering the 100,000 plus per month that the city burns through keeping the lights on and the water flushing.

Also on the discussion table at better coffee shops around the city are other potential cost saving measures such as selling CityWest, shifting the fire department towards more of a volunteer agency, privatizing garbage collection in the city or even if deemed necessary, approaching the issue of extensive civic employee layoffs or wage roll backs, items that don't seem to ever get a mention, or never it seems come out from behind the closed meeting sessions that are popular with this council.

Now before the CityWest servers fill up with angry civic workers expressing outrage at this blog, we don't necessarilly subscribe to all of the above as needed cost saving measures, but have heard these topics expressed around town in a variety of settings, so clearly they are items of interest to the city's taxpayers and perhaps are something that council might wish to take the taxpayer and voters temperature on.

By better understanding what city residents wish to see delivered from their city government, there is then the possibility of better addressing the financial burdens of the day, allocating the limited and dwindling funds to those services that the citizens really wish to have the city involved in.

That at least could be a more acceptable way of accessing funding for civic priorities rather than what seems to have become the tried and true method of just hitting up the diminishing number of  taxpayers for another few percentage points on the tax bill every year.

Council and the Mayor should be aware that eventually there are limitations to the constant cash grab at the expense of its struggling residential class, a review of the events in Dawson Creek of late last year, is something that could prove instructive if a council gets a little too far off the comfort zone of its voters.

The public can offer up their thoughts on the City's burden shifting plans at the next council meeting of April 26th.

The Financial deliberations of the last week were covered extensively in the local media, with some of the more helpful of examinations provided below.

Daily News, Thursday, April 15-- City presents 2010 Five Year Financial Plan for the community

Fee increases part of City’s budget 
By Monica Lamb-Yorski 
The Daily News 
Friday, April 16, 2010

Chief Financial Officer Dan Rodin outlined some increases in fees and services at this week’s City Council meeting.

They are targeted for the airport ferry, recreation complex, transit bus and the cemetery.

The impact of the fee increases, predicted Rodin, would generate around $350,000, enabling the City to keep the tax increase down to 3.53 percent, rather than 5.4 percent.

“The airport ferry has ran a deficit fairly consistently,” Rodin reported to Council. “In 2003 it was $676,762 and in 2009 it’s going to be $915,528. The deficit is increasing and costs have increased every year and the fees that we charge have not increased since 2003.”

According to Rodin, the City is probably the only transportation carrier in North America that did not put in a fuel surcharge when fuel prices increased.

“We’ve looked at the fare structure and are proposing we go from $14 for a one way trip to $20 for a one way trip. Additionally, what we’ve done is identified a number of other fares on the airport and we are increasing them all, too. We assume that by implementing these fees effective July 1, 2010 we would generate about $148,000 for the first year.”

Harmonized sales tax is included in the increase, so $2.40 of the increase will be turned over to the federal government, Rodin added.

At the recreation complex, staff looked at the subsidy provided by the City. Those funds have gone from $1,472,499 in 2003 to $1,987,720 
in 2009.

“It is a well used and very popular facility. HST is going to be charged there - effective July 1, 2010 - so we’ve proposed to take the daily ticket prices and rounded them up and down to accommodate them to the 12 percent so we’re not moving pennies back and forth across the board. We haven’t increased the fees other than adding to meet the HST.”

A deficit at the city’s cemetery has averaged around $107,000 over the last seven years.

“We are proposing there be a 20 per cent increase for the next near and a 20 per cent increase for the next three years,” Rodin said.

Examples of some of those increases, according to a chart he provided in his report, would be the cemetery licenses going from $360 in 2010 to $622 by 2013 and the internment fees, with the interment in a plot rising from $900 in 2010 to $1,555 in 2013. In addition, the care fee on the license will be increased to $425.60.

Roding said ridership on buses in Prince Rupert is one of the highest per capita in the province.

“The year before, we put bike racks on the buses to encourage people to use the bike-bus-bike program, but according to our provider the racks haven’t been used very much.”

An increase is being proposed for a 25-cent per ticket fee increase each year for the next three years.

“Again there is HST on that and we would be absorbing that cost,” Rodin explained.

In 2005, transit generated a revenue of $260,216 against expenses of $422,287, resulting in a $162,071 deficit that the City subsidizes. In 2009, the revenue was $319,664 and the expenses were $559,299, resulting in a $239,635 deficit.

“The subsidy to bussing has increased each year. While revenues have increased slightly due to ridership, the cost of the BC Transit Contract has consistently exceeded the increase in ridership. This year the Transit Contract is expected to increase by nine percent,” Rodin said.

The public will have an opportunity to give input on the budget at the next regular council meeting scheduled for April 26. People wanting a copy of the plan can find it at City Hall or on the City’s website.

The Northern View also provided some background on the city's plans, with an article posted to their website on April 14.

City shifting some of the burden of tax increase from businesses to residential properties 
Shaun Thomas 
The Northern View 
Wednesday, April 14, 2010 

The City of Prince Rupert voted on Monday night to increase taxes by 3.5 per cent as part of the five year financial plan, but also narrowly passed a motion that will see residential taxpayers bear a bit more of the burden than business owners in the community.

Chief Financial Officer Dan Rodin presented two options to council, one that would equally apply the tax increase and one that would shift 15 per cent of the proposed tax increase – equivalent to $55,000 – from business to residential properties. The result is an additional eight cents per $1,000 of assessed value for residential taxes compared to the blanket application method and a reduction of 35 cents per $1,000 of assessed value for business property owners compared to the blanket tax increase approach. It is also a shift that sees residential taxes accounting for 45 per cent of the tax base instead of 44 per cent and businesses accounting for 31 per cent instead of 32 per cent.

And as the discussion began, it was clear that councillors were not entirely in agreement on the idea, with opposing voices seeking to maintain the blanket application of tax increases that has been used in the past.

“I am opposed to monkeying around with this. I would like to see us do something else to help support the business community because there are other issues out there like water and sewer usage and parking that we could address,” said councilor Joy Thorkelson.

“While it would be somewhat of a help, I don’t think it would be enough of a help to businesses to make it worth some of the issues it would raise in the community…But I am in favour of doing something for businesses because walking down 3rd Avenue it is clear businesses are hurting,” added councillor Anna Ashley.

On the other hand, councillors said this would be a good step to show the community is open for business.

 “Is 35 cents per $1,000 going to keep a business open? No. But decreasing the tax burden on businesses could make it more attractive for business to establish in town…I believe the tax shift would create a positive business atmosphere,” said councillor Kathy Bedard.

 “When you look at the residential tax rate we are about middle of the pack in the province for communities that offer what we do, like a pool, theatre and recreation complex. But one area where we are in the top three or four is in business taxes, and when I drive down 3rd Avenue and see more businesses closing every week it worries me,” said councillor Sheila Gordon-Payne.

 In the end councillors Thorkelson, Ashley and Nelson Kinney voted in opposition of the tax shift, while councillors Gordon-Payne, Bedard and Gina Garon voted in favour. Mayor Jack Mussallem broke the tie with his vote for the tax shift.

A public hearing on the five year financial plan and taxation bylaw is scheduled for the next council meeting on April 26.

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