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Onward and upward: City budget prepares to take more from Nelsonites in 2024

May 8th, 2024

For the second straight year the City’s tax take tips the scales on the north end of five per cent.

Although City council prided itself on keeping taxes low or at the rate of inflation — as provided by Statistics Canada — from 2019 to 2022, it has been making up for it since.

Council approved a 5.3 per cent increase in municipal property taxes for 2024 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 2.8 per cent in February — while still being able to continue to provide the same services to Nelsonites.

That work continued since late last year when the budget was pulled apart and examined for possible savings, said City manager Kevin Cormack.

“It is important to keep in mind, if we have a one per cent increase in costs, we have to have a two per cent increase in taxes to cover that off,” he said. “This year is a bit different than previous years in that we had a decrease in assessed value.”

The average Nelson home assessment went down by 1.41 per cent. But even though the assessments went down, the taxes have gone up.

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 take was 5.8 per cent.

For the average residential home in Nelson, the municipal property taxes for 2024 are estimated to be $2,036. The water and sewer and resource recovery rate increases equate to a $49 rise for a single-family home.

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.

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 2 — with a 10 per cent penalty on taxes paid after this date. The tax rates presented are based on the 2024-2028 Five-Year Financial Plan that was presented for first three readings on April 23.

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 2024, with the adjustments made for new construction, 74 per cent of property tax will be contributed by residential taxpayers and 26 per cent from the commercial sector.

Source: City of Nelson, April 23 agenda

Getting there

The 2024-2028 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 forecast departmental budgets.

The budget open house was held earlier this year, with the presentation being streamed online. There were members of the public present, with some non-staff and council participants.

“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 City chief financial officer Chris Jury.

Source: City of Nelson, April 23 agenda

Surplus funds

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, said Jury.

“The combination of conservative revenue projections and controlled expenditures should produce a modest annual operating surplus,” he said.

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

Reserve funds

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 2024.

Source: City council agenda

Categories: BusinessGeneral

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