Budget goes above and beyond previous five years with nearly six per cent hike
Call it the drive for five.
City council has made up for keeping taxes low or at the rate of inflation — as provided by Statistics Canada — for the last five years with a 5.8 per cent increase in municipal property taxes for 2023.
On Tuesday night during a regular city council meeting in council chambers the elected officials passed fourth reading and adoption on the Five-Year Financial Plan Bylaw that carries several increases.
Chief financial officer Chris Jury told city council defended the budget, noting City staff tried to rein in the rising cost of everything it had to purchase — at an inflation rate of 5.25 per cent in February — while still being able to continue to provide the same services to Nelsonites.
“(T)he growth of inflation has slowed but we are still seeing increases and, of course, that is something we are catching up a bit from 2022 and trying to contain these costs in our 2023 budget,” he said when speaking previously on the budget.
“If you look at a lot of the services the city provides … we have really endeavoured to keep that overall tax increase to the tune of inflation, or below levels.”
In 2019 the City instituted a 1.9 per cent tax increase (inflation of 1.9) followed by a 2020 1.8 per cent increase (.7 inflation), with 2021 a 1.6 per cent increase from the city (inflation was 3.4 per cent) and a 2022 increase from the city of 3.9 per cent (6.8 per cent inflation). In 2023 the city’s 4.2 per cent increase is behind the rate of inflation of 5.2 per cent.
Taking that average home assessment value of $674,000, and translating a 5.8 per cent increase means in 2023 an average tax of $1,936 for homeowners in Nelson, an increase of $106 for the year, or $8.85 more per month. In 2022 the average municipal tax was $1,830. The water and sewer increases equate to a $22 rise for a single-family home and $64 for a 50-seat restaurant over and above the 2022 rates.
Section 165 of the Community Charter requires that a financial plan be adopted annually, by bylaw, before the Annual Tax Rate Bylaw is adopted. All proposed expenditures, funding sources and transfers, to or, between funds must be included in the plan.
Jury said the 2023-2027 Financial Plan process included council and City staff having a variety of internal, external and public meetings over the past six months to review current financial performance, budgetary pressures and forecasted departmental budgets.
In addition to those open meetings, the public had the opportunity to attend a budget open house on March 30 at City Hall, with the presentation being streamed online for the fourth year.
“Council should be aware that, other than the few questions that were asked at the presentation, the Finance department did not receive any more questions or communications from the public regarding the budget or the budget presentation,” said Jury in his report to council.
Four months ago city council approved a combined increase of two per cent to water and sanitary rates for all connected properties, adding up to a $22 increase for a single-family home and $64 for a 50-seat restaurant, over and above the 2022 rates.
City council began raising the tax stakes late last year when it approved a four per cent jump in electricity rates for the urban Nelson Hydro customers.
To compound the municipal mandate is a seven per cent ask that the Regional District of Central Kootenay will be making on the tax bill, and a yet-to-be determined chunk from School District No. 8 (Kootenay Lake) and the regional hospital authority.
BC Assessment and Municipal Finance Authority taxes make up the remainder of the tax bill.
On the flatline side, council approved a zero per cent increase to the annual rate for residential resource recovery, remaining at $100 for 2023. There was no increase to the $1.75 bag tag fee.
The Community Charter does not allow municipalities like the City of Nelson to plan an operating deficit, where expenditures exceed revenues.
To ensure that situation does not occur, revenue projections are conservative and authorized expenditures are closely monitored, wrote Jury in his report to council.
“The combination of conservative revenue projections and controlled expenditures should produce a modest annual operating surplus,” he wrote.
Council is required to review options and provide direction to staff regarding the allocation of any operating surplus prior to completion of the budget process for the following year.
According to the financial plan, the City has $2.8 million in surplus/non-statutory reserves, $1.3 million in a water operating fund, $3.6 million in a Nelson Hydro operating fund and $1.04 million in a sewer operating fund.
Source: City council agenda, May 9
Reserve funds shall be set aside to:
1. Provide sources of funds for future capital expenditures;
2. Provide a source of funding for expenditures that fluctuate significantly from year-to-year;
3. Protect the City from uncontrollable or unexpected increases in expenditures or unforeseen reductions in revenue; and
4. Provide for working capital to ensure sufficient cash flow to meet the City’s needs throughout the year.
The financial plan revealed $2.8 million in utility reserves and $9.6 million in general reserves for 2023.
Source: City council agenda, May 9
Setting tax rate
An Annual Tax Rate bylaw is also required in order to collect the appropriate funds to finance the activities laid out in the financial plan.
This year City of Nelson taxes are due at the end of the business day on July 4 — with a 10 per cent penalty on taxes paid after this date. The tax rates presented are based on the 2023-2027 Five-Year Financial Plan.
The City takes a “fixed share approach” to tax rates between classes; where the share of the total tax levy collected from each property class remains consistent over time, subject to adjustments arising from non-market (new construction) change in the assessment role or council’s decision to adjust the share for each class.
In 2023, with the adjustments made for new construction, 74 per cent of property tax will be contributed by residential taxpayers and 25 per cent from the commercial sector.
Source: City of Nelson, April 25 agenda