Today’s Poll

Rise in municipal taxes tied to decision on regional district cash infusion

Timothy Schafer
By Timothy Schafer
March 25th, 2019

For those about to tax, we are uncertain.

City council has yet to finally decree on how it will handle the upcoming municipal property tax levee, said the city’s chief financial officer Colin McClure in the annual open house on the budget, and it is wavering on where an inflationary increase may be coming from.

Delivered March 18 in council chambers, the budget bottom line number is still not nailed down since the elected body of government has not had a chance to meet and discuss how it would like to handle proposed funding changes from the regional district, said McClure.

The Regional District of Central Kootenay (RDCK) recently announced it will be contributing money to the city for parks and emergency management, said McClure.

“The RDCK recognized that city parks are well used by rural residents and have decided to contribute funding to that,” he said in his presentation.

The $158,000 from the regional district — the result of several years of negotiations between the two governments — could supplant or augment a two per cent property tax increase initially proposed by council.

Where the money comes from will likely be a shell game of sorts, with the increase from the regional district ultimately being borne by taxpayers. The RDCK tax requisition will jump by $77 per year for the average home — from $541 to $618 — coupled with a $9 tax increase from the West Kootenay Hospital requisition.

That means the average Nelson tax requisition could be $3,296 — up by 3.5 per cent, or $86 — with municipal, regional district, hospital, school (zero per cent increase) and the BC Assessment/Municipal Finance Authority requisitions factored in.

The current proposed average municipal take could be around $1,689, a drop of $192 to water rates, a rise of $211 to sewer rates and no change to resource recovery rates.

“There is a definite concern about tax increases again,” McClure said. “And whenever permissible we keep them at a minimum.”

But there was such a big increase in house values in Nelson this year from BC Assessment, noted McClure, that fear of a tax rise is paramount. However, the assessment jump does not translate into more tax dollars for the city, he added, but instead which avenues the money comes from.

The city tries to maintain a ratio of 75 per cent of its taxation coming from residential assessments, with the other 25 per cent from business taxation.

But with the average Nelson household assessment bumping up $62,000 — from $393,00 to $455,000 — the tax bill will re-worked for some this year.

“If you have a home that’s gone up 25 per cent (in assessment) the likelihood is you are going to see a tax increase greater than the person that is at the average,” said McClure.

“If you went up 16 per cent there won’t be much of a change other than what tax increase might happen.”

Water and sewer rates overall will see an increase of 1.75 per cent, or $19 for a single-family home. This means rate reallocation has dropped water rates by $192 and increased sewer rates by $211 (with discounts).

Water conservation efforts, the search for secondary water sources, continuation of watermain replacement and data gathering for water metering will continue in 2019, said McClure.

Like the sewer rates, a two per cent increase has been proposed for the next 10 years.

McClure said improved technology — such as the “CIPP (cured-in place pipe)” — has cut cost of relining sewer pipes significantly.

However, there is a proposed 1.5 per cent per year increase to the utility for the next 10 years to deal with asset repair and maintenance.

“There has been a very positive result in that we have been able to clear a number of infrastructure deficits we’ve had and we are in a more forward thinking place,” said McClure. “We are not in the infrastructure deficit like we had been.”

For the resource recovery utility the “waste function” is based on a fee for service model, with the yearly charge per household paying for the collection.

The city is receiving $142,000 per year from Multi-Material BC to collect recycling, helping to nullify an increase to the service for the third straight year.

“This revenue is currently being used to fund operations,” said McClure.

In 2019 the city signed a new five-year contract with Recycle BC, which requires the elimination of single use blue bags for curbside pick up by July of 2020.

As well, McClure said the city will be seeking to purchase a new garbage truck this year, along with a “made-in-Nelson” solution to composting.

Nelson Hydro power rates will increase effective April 1 by 1.5 per cent for urban customers and 2.94 per cent for rural customers.

There will also be no change in garbage and recycling fees for the third straight year.

Hydro is expected to realize a revenue of $18.7 million in 2019, with $5.1 million in operating expenses and $6.7 million in power purchases ($499,000 in debt payments).

For its part, Hydro will be contributing $2.8 million to City of Nelson operations — equal to a 32 per cent increase in taxation — $658,000 to the water license reserve and $90,000 to the Nelson and District Community Complex.

The overall capital plan for 2019 is $15.8 million, with $7.8 million allocated to water, sewer and hydro.

The work will include a continuation of water main replacement and sewer main upgrades, transmission system upgrades, building and park improvements.

City operational revenue is pegged at $46 million, with total operational expenses predicted to be $39 million.

“Revenue over expenses pay down debt and flow into operational and capital reserves,” said McClure.

General fund operational expense and allocations to reserves is budgeted at $22.1 million in 2019, he added, funded by $10.4 million in taxation.

People can still comment on the budget through email ()or by written comments dropped off at City Hall. Comments will be collated and brought to council for further review and consideration.

 

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