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Tax take less than expected with late grants defraying costs

Last month the City received approval on grant funding that will help defray the presented three-per-cent increase to municipal taxes.

The tax bite won’t be as deep this year as expected.

Just after the city held an open house on its draft budget early last month it received approval on grant funding that will help defray the presented three-per-cent increase to municipal taxes.

The Columbia Basin Trust approved the city’s application request for grant funding support of $137,000 over two years to assist in the new Nelson budget request to create an Emergency Operations Centre (EOC), as well as moving forward on city council’s priority of addressing local wildfire mitigation.

With the new CBT grant funding included — as well as a lower tax requisition from the regional district — the final operating budget document decreased the proposed three per cent tax bump down to 2.5 per cent.

“Of this 2.5 per cent increase council directed that 1.4 per cent of the increase, which amounts to $120,000, be allocated to the building reserve to assist in the ongoing challenges of required capital improvements and upgrades to city-owned buildings,” said city chief financial officer Colin McClure in his report to council.

The 2.5 per cent municipal tax increase will be partially offset by the estimated one per cent decrease in taxation from the regional district having the overall effect of a 1.5 per cent tax increase in 2018, he added.

McClure explained that the combined municipal and regional district taxes amount to approximately 70 per cent of the entire tax bill that Nelson households receive. School taxes are set by the province and make up 26 per cent of the remaining 30 per cent. The financial plan includes a 2.5 per cent increase in property taxes for 2018 plus rate increases for water, sewer and Nelson Hydro, all previously approved by council.

In order to enhance the sustainability of city services and infrastructure the city is committing an additional $120,000 to make an ongoing $300,000 annual contribution to the building reserve, he said in his report.

Overall, in addition to the property tax increase ($40 annual increase, based on a $392,861 home) to $1,690, city council has formulated a two per cent increase ($11 annual increase) in water rates per home, as well as 1.5 per cent ($7 annual increase) in sanitary sewer rates for a home.

There will also be a 2.25 per cent increase in Nelson Hydro rates effective April 1 (an increase of around $2.30 per month). There will be no change in garbage and recycling fees since the city is currently receiving $134,000 annually from Multi-Material B.C. to collect recycling, enough to fund the operation.

Not including the power rate increase, the city’s residential taxpayers will pay an average increase of $58 to the city — rising from $2,768 (2017 actual) to $2,826 (2018).

Businesses in the city — which make up 25 per cent of the tax role — will see an average increase of $313 per year. Based on a $1 million assessed value commercial restaurant, property taxes rise from $11,739 (2017) to $12,053 (2018).

All city operational revenue is close to $43 million, with total operational expenses around $38 million.

Council passed third reading on the proposed budget late last month and will look to write it into bylaw early this month.

The Five Year Financial Plan Bylaw includes the revenues and expenditures planned for 2018–2022 that have been presented to both council and the public.

Tax rate ratio

There was a 9.36 per cent increase in the residential assessment values for 2018, with commercial assessments going up 10.14 per cent as compared to 2017.

The city has historically looked to maintain the same tax rate ratio every year, with the 2018–2022 financial plan and 2018 tax rate bylaw using the “fixed share approach” — meaning keeping the share of the tax levy collected from each property class constant except where changes are due to non-market changes such as growth.

McClure said the result is the same 73 per cent and 25 per cent residential and commercial ratio of the total municipal tax burden.