If you had to choose between Nelson City Council cutting back its funding for snow ploughing or its grant to the Capitol Theatre or its staffing at the fire hall, which would you vote for? Would you prefer that council increase funding for police equipment, or the youth centre, or pothole repair?
Those are examples of the kinds of discussions that could occur at the City Council’s budget planning sessions in February. They will be discussing the cost of a wide range of municipal activities including:
- Protective services (e.g. fire, police, by-law enforcement)
- Recreation and cultural services (e.g. library, Capitol Theatre, Youth Centre, Touchstones, parks and playgrounds)
- Public works (e.g. transportation, snow-ploughing, street maintenance)
Staff wages and benefits are the costliest item
About 85% of the costs in those areas are related to staffing, so spending increases stemming from annual wage hikes embedded in collective agreements.
That leaves a small percentage of expenses that are open for adjustment. In most years, Council discusses cuts or changes in this tiny sliver of the budget pie in an attempt to keep taxes low, and there are often differences of opinion on council about what level of tax increase is acceptable.
Trying to fund $16M in expenses with $8M in taxation
“One of our challenges is that taxation only covers about 50% of the budget in that area,” says City Manager Kevin Cormack. “So we are trying to fund about 16 million dollars in expenditures with about just under 8 million in taxation.”
The other half has to come from grants from other levels of government and from various fees such as business licences. Cormack says he expects that those sources of revenue will either remain unchanged or decrease in the coming year.
“So the impact is that if fees and grants from other areas of government are not increasing with inflation,” says Cormack, “Taxation has to make up for it.”
Even if the city maintains the status quo by continuing its 2011 rate of taxation and adds no new services, there will be a shortfall of hundreds of thousands of dollars.
Water and sewer bills will increase
Hydro is not on the list above because before the February planning meetings, a decision will have already been made to increase rates by 5.8%.
Sewer and water are funded by user fees (homeowners’ annual water and sewer bill), and by borrowing to maintain and rebuild infrastructure. Last year Council approved a 9% increase in water rates and a 7% increase in sewer rates, and rates for both utilities are expected to increase by those amounts each year for the next four years according to the city’s current 5-year financial plan.
Council will have to decide in February on the actual rate of water and sewer increases for the coming year.
Sessions are open to the public
Council will make all of these decisions at a series of budget meetings in February—click here for dates. Those sessions are open to the public. On March 1, Council will hold an open house to inform the public what they have decided.
Amendment February 20. The date for the open house has been set back to sometime later in March. BM