City to host budget open house: Small tax increase for a balanced budget?
Nelson residents wondering where the city’s money comes from and where it goes can find out at the City’s Budget Open House at the Nelson Municipal Library on Monday March 11. Nelson’s Chief Financial Officer Colin McClure will be presenting and illustrating the city’s financial situation and taking questions.
To provide the same services as last year and to balance the City’s $40 million budget, the City of Nelson is proposing to raise property taxes by 2%. That would generate an additional $140,000 for city operations.
Wages and benefits are the biggest expense
McClure says the increase is a result of inflation and because the city is currently in contract negotiations with its four unions. That will result in unknown cost increases.
The cost of union agreements is no small thing, considering that wages and benefits make up about 80% of the city’s operations budget.
Asked by The Nelson Daily what aspects of the budget he would like the public to better understand, McClure had two immediate responses.
Your property tax includes school tax and more
“The city is a conduit, we collect taxes on behalf of other entities,” he said. “Out of the home taxation the city collects, less than half is for the city. The rest is for the hospital board, for the regional district, and for the provincial government for school taxes. Over 41% of the tax bill that homeowners get goes to school taxes.”
“You get this tax invoice from the city, and when you get up off the ground from looking at how much it is, you say, ‘Why do they need this much money?’ It is helpful to know that we are actually collecting on behalf of others.”
Water and sewer: cost increases to replace pipes
McClure’s second response was about water and sewer rates, which are not part of property taxes but come as a flat rate bill to homeowners each year.
“People struggle with the increase in the water and sewer rates,” says McClure. “Many people say we need to have water meters so they can control what they pay. That is a very understandable comment, but in Nelson, because we are gravity fed, that actual cost of getting water to your door is one of the smallest costs of the utility. The biggest cost is the infrastructure.”
By that McClure means the pipes, which in Nelson are close to 100 years old. They need to be replaced, and the City has been gradually doing that for several years, and that’s what residents’ increased water bills are paying for. McClure says current residents are paying for upgrades that should have been done in the past.
Tax increase average: $71 per homeowner
The 2% tax increase and increases to water and sewer rates this year will amount to a tax increase of $71 for the year or about $6.00 per month, McClure says, for a home valued at $320,366 (Nelson’s average home value).
The importance of Nelson Hydro
McClure also wants people to understand the importance of Nelson’s ownership of its own hydro utility. This year the City’s shareholder dividend from Nelson Hydro will amount to about $2.3 million.
This is significant revenue for Nelson, especially considering the lack of a large tax-paying industry like Castlegar’s pulp mill or Trail’s smelter. Without Nelson Hydro, Councillor Donna Macdonald once told The Nelson Daily, “Nelson would have unpaved streets.”
Grants from senior governments: essential but unpredictable
McClure points out that taxation only covers about 50% of the budget for city operations. So the city is trying to fund about $16 million in expenditures with about $7.5 million in taxation.
The other comes from various fees such as business licenses, and from provincial and federal government grants, the amounts of which are difficult to predict but which in the past few years have plateaued or declined.
Reserves and a Facilities Manager
McClure also points out that Nelson puts away money each year in a system of reserves for eventual upgrades of buildings, utilities, roads, and equipment. He says this year’s budget proposal includes a salary for a new position of Facilities Manager.
A review of city facilities completed in 2012 came to the conclusion that the maintenance and upgrading of the City’s buildings needed better management oversight.
“We have not managed our buildings as well as we should have,” says McClure. “It’s amazing how many buildings the city owns. Are we getting the best use of our buildings? With some of them, we need to look at whether someone would want to buy them. If the city owns them we don’t get any taxation from them. If we could sell them and turn them into revenue properties, that may be a better decision. So a Facilities Manager would be able to investigate these things.”
All that and more
At the budget open house McClure will also present information on
- Council priorities and strategic direction
- Revenue sources
- Taxation assessment
- Operating expenses
- Capital and assets
- Surplus and reserves
- Debt and debt servicing
- Utilities: strategic directions and rates
Open House details
Monday, March 11,
Noon to 4:00 pm
6:00 to 8:00 pm
Formal Presentation at 7:00pm