Revelstoke council approved its budget on Monday, despite protestations from the Chamber of Commerce that it needed to shift the tax burden away from businesses.
Council held a 90-minute special budget meeting on Monday that started with a plea from the Chamber of Commerce to reduce the tax burden on business, and ended with a split council approving the financial plan as it was presented to the public at the end of January.
Council chambers was filled with business people eager to find out how they would vote.
The plan includes $21.7 million in spending, a two per cent tax increase on residential properties, and a one per cent tax increase on business properties.
Councillors Aaron Orlando, Gary Sulz and Linda Nixon voted in favour of the financial plan as presented, while coun. Connie Brothers and Mayor Mark McKee voted against it. Couns. Scott Duke and Trevor English were both absent from the meeting.
The financial plan still requires final adoption by council.
Chamber presents concerns
The meeting began with a presentation by Judy Goodman, the executive director of the Chamber of Commerce. It has been an ongoing concern from the business community that their taxes are too high and they pay an unfair share of the city's taxes.
The Chamber made five recommendations about the budget process to council. Goodman's presentation focused on the taxation issue.
She advocated for council to shift the tax burden away from businesses and onto residences, saying it wasn't fair for businesses, which represent about 20 per cent of assessed values, to be paying 50 per cent of the taxes.
She called for council to reduce the ratio of business taxes to residential taxes to 3.5:1 for 2016, and said the ratio should be reduced to 2:1 by 2020.
"We need to create fairness in the property tax system and its essential to retaining and attracting business to our community," she said.
She said the high taxes prevent businesses from expanding, and people from purchasing existing businesses.
"Our community can’t sustain this imbalance," she said. "When businesses are paying more in tax, they’re not going to be building new buildings.”
The chamber's proposed the tax on residential properties go up by $29 per $100,000 in value, while the tax on businesses would go down by $66 per $100,000 in value. Industry would see even larger tax reductions. The burden would continue to shift towards residential properties until the 2:1 tax ratio is reached.
“Unfortunately, that’s where we need to move because you’re not going to create fairness and get rid of the disparity without making that move," he said.
Graham Inglis, the city's director of finance, responded by showing that the ratio between business and residential taxes was largely a function of assessments, which have gone up significantly more for residences than businesses.
He said moving to a 3.5:1 ratio would require an eight per cent tax increase on residences, and a three per cent reduction on businesses, if spending levels are maintained.
How taxes are divvied up is up to council. "That’s the problem you have to struggle with, and I don’t envy you," Inglis said.
Council debates
Coun. Brothers argued in favour of lowering taxes on businesses, saying it would help property values.
"Right now the burden is on the businesses, as I can see it," she said. "We have to determine as a council how we rectify that."
Coun. Sulz questioned shifting taxes onto residents. He noted that businesses can write-off property taxes as a business expense, whereas homeowners have to pay them on their after-tax income, which makes them a bigger burden.
"If residents have a limited pot of dollars to pay out in the community, will they be spending less dollars in the local businesses to support them?" he wondered.
Coun. Aaron Orlando said there was a need to pass a budget soon so city staff could get started on capital projects. He said council should aim to reduce the ratio to the provincial average (about 2.6:1) but shouldn't fall into the trap of chasing it.
“I think it will take time for us to shift slowly and gradually," he said.
Mayor McKee raised the issue of spending. “Are we comfortable on the amount of money we’re spending?" he said. "I don’t hear anyone talking about possible cuts.”
He asked for proposals on spending cuts. "I’m looking for solutions instead of questions and problems, and quite frankly I don’t see a lot of solutions. If we’re not 100 per cent happy I don’t want us to be rushing through and approving a budget.”
McKee then asked for someone to put forward a motion. Nixon moved that the budget be given third reading as it stood, without any changes. She said council would have to sit at the table together and tackle the budget line-by-line for next year.
Nixon, Orlando and Sulz voted in favour of the budget, while McKee and Brothers voted against it.
"I’m comfortable we’ve done our due diligence," said Sulz.
"I still think we can be doing more work on it," said McKee.
Chamber critical of budget vote
The Revelstoke Chamber of Commerce said it was disappointed with the city's budget vote in a news release issued on Wednesday.
"Adopting a fair contribution system, reduced spending and attraction of new construction would contribute to a more productive economy where businesses can thrive and increase employment and service, bringing value to the community at large," stated chamber president Randy Driediger.
The chamber noted the city ranks as one of the highest spending municipalities in the province, according to the Canadian Federation of Independent Businesses.
The chamber criticized council for not adjusting the tax rates on each class, and approving the budget without all councillors present.