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Updated budget documentation leads to higher municipal tax rate than first proposed

Timothy Schafer
By Timothy Schafer
May 2nd, 2017

A recent city budget meeting less than two weeks ago has erased the once proposed 4.85 per cent municipal tax increase, instead replacing it with a 6.35 per cent rise to cover a facilities shortfall for the Civic Centre Arena.

City council passed third reading on the Five-Year Financial Plan Bylaw Monday night in city council chambers during its regular meeting, based on updated budget documentation received at its April 19 budget meeting.

The extra 1.5 per cent came down on the condition that the $120,000 in new tax income — every $80,000 in taxation is a percentage point — would be allocated to the building reserve fund to assist in the “ongoing challenges” of required capital improvements and upgrades to city-owned buildings.

“This decision was not made lightly,” Mayor Deb Kozak read in council when introducing the plan.

Although the city proposed a 4.85 increase at its budget open house in February there was also a caveat at the meeting that the tax increase number was awaiting the outcome of city negotiations with the RDCK recreation commission. 

City members on the recreation commission were attempting to lower the tax requisition city taxpayers shell out for the Nelson and District Community Complex, as well as looking for support to help fund capital upgrades at the Civic Centre Arena.

The tax requisition was lowered but no agreement was made on funding the upgrades to the Civic Centre.

“As staff worked through the effect of the decrease in the tax requisition from the RDCK and noted the now underfunding of necessary capital upgrades to the Civic it became apparent that a plan to assist in the long-term funding of city buildings could be undertaken this year with minimal effect to taxpayers,” said city chief financial officer Colin McClure in his report to council.

Coun. Michael Dailly had made an appeal in previous budget meetings that the tax rate imposed on residences should remain at or below inflation.

“A lot of our residents live on a fixed income so (such an increase) is hard,” he said.

The financial plan will include a 6.35 per cent increase in property taxes for 2017 as well as rate rises for the city’s three utilities — water, sewer and Nelson Hydro — which have been previously approved by council. 

For an average single-family home — valued at $353,886 — the total tax bill is just over $3,000 ($3,093), with municipal taxes making up over half of that bill at $1,568.

Within that tax bill, the average homeowner will pay $39 to debt, $102 to the West Kootenay Boundary Regional Hospital District, $541 to the regional district and $813 to school taxation.

Add in the water rates ($538), sewer rates ($462) and resource recovery ($118) and the total tax take is $4,196, up $87 from last year.

Tax rate bylaw

The share of the tax burden was also determined Monday night as the city passed third reading on its Tax Rates Bylaw.

“In keeping with council’s objective to maintain the same tax rate ratios as previous years staff were directed to prepare the 2017 – 2021 financial plan and 2017 tax rate bylaw using the fixed share approach,” said McClure 

This means city council wanted to keep the share of the tax levy collected from each property class constant except where changes are due to non-market changes such as growth. 

That meant a 73 per cent and a 25.4 per cent residential and commercial ratio split of the total municipal tax burden. 

However, this year the required adjustment to the tax multiplier was different as compared to previous years because the residential assessed values were “significantly higher” than in the commercial sector.

There was a 7.65 per cent increase in the residential assessment values for 2017, along with a 3.25 per cent rise in commercial assessments as compared to 2016. 

— Source: City of Nelson

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