Revelstoke council made few changes to its draft budget, opting for a smaller tax increase on businesses, but almost the same spending as proposed by city staff.
The result is the city will run a $20,000 deficit in 2015.
Faced with their first budget and little time to prepare, council said any real cuts will have to wait until next year.
"I feel we’re behind the eight ball and I’m looking forward to other things happening and getting more in depth next year," said mayor Mark McKee.
Council passed a budget that features a two per cent tax increase on home owners and 0.5 per cent tax hike for business owners, plus increases to water, sewer and garbage rates. The first draft of the budget featured a two per cent tax increase on businesses.
They also voted down a tax decrease for Downie Timber and instead opted to give it the same two per cent increase applied to classes other than business.
The vote came after 2.5 hours of deliberation at council's third budget meeting on Thursday, Apr. 9. The full financial plan can be read at the end of this article.
Council was presented with a $23.2 million budget that included tax increases of 2 per cent for each class, except major industry, which would enjoy a 6.99 per cent decrease.
Council's debate largely centred on what the tax increase should be, with less of a focus on spending. That would need to wait until next year after council has had a better chance to look at the budget and service levels.
They did vote for some changes to the budget, but those had little overall impact on the budget they were shown.
At issue was whether council should make a political move to demonstrate it was focused on minimizing tax increases, or if it should take a conservative approach this year and wait until 2016 before making any significant moves.
Councillor Linda Nixon was the first to present a different taxation scenario, offering instead a one per cent increase in business taxes.
Coun. Connie Brothers who led the push for a smaller tax increases all around, first floated no change in taxes across the board, and even pondered reducing taxes. McKee nipped that in the bud right away.
"I think we’re going to have a tough time getting to a zero budget, let along a decrease," said McKee. "Because of where we are today, I’m trying to get us through the budget as unscathed as possible knowing this council’s appetite is to really dig down in next year’s budget.”
Brothers then floated a 0.5 per cent tax increase for businesses, and 1.5 per cent for everyone else.
"I think we have to look at where Revelstoke has been. The public has said we have to take a look at our budgets and we have to start tightening our belts," she said. "I have a serious concerns about two per cent because we seem to do that every year.
“Where do we find some savings? What have we done?"
Nixon said council would have to look at tackling service levels.
"We have to have those hard discussions about which are core services the city provides and which ones we're going to be brave enough to say we're not doing anymore," she said. "The budget is the budget for this year and the next thing we're going to work on is service levels."
Couns. Duke and Orlando favoured a more conservative approach, both arguing in favour of a two per cent increase in order to not sacrifice reserves this year.
"If we’re going to defer something, I think we should have some sort of reserve for those things," said Orlando. "The only downside is that means an increase right now. I would rather do it now than be behind the eight ball two years from now and you have to jack things up eight per cent."
Duke made a similar argument. He said council shouldn't get hung up on the tax increase, but rather it should focus on saving money.
"What’s costing the city money is us not focusing on saving money at all times. It's a culture thing that needs to happen here and I think that's what everyone at this table wants to happen," he said. "What I don’t want to see happen is not raise the taxes at all and then you don't have that cash to put on reserves."
Mayor McKee argued in favour of the lower tax increases. "I don’t agree with deferring something and then putting money aside to cover that deferral. Its counterintuitive in my mind," he said.
Another matter debated was Downie Timber's tax rate. The draft budget gave major industry, which in Revelstoke is Downie Timber, a 6.99 per cent tax decrease due to a policy that tied the tax rate for major industry to that of light industry.
Changes in assessment values meant Downie would have seen its taxes go down by $20,000 — instead it will be paying about $311,000 in taxes this year. Inglis said that prior to a series of tax breaks initiated by the previous council Downie's tax bill was more than $500,000.
"Downie is the most important business in our town, but I would like to say if they could pay $304,00 last year, they could pay $304,000 this year," said coun. Scott Duke. "I don’t see why they should see a decrease when everyone else is seeing an increase."
In the end, Nixon introduced a motion for a 0.5 per cent increase in business taxes and a two per cent increase for the other classes, including Downie. That got Duke's support, but Orlando voted against the budget.
"The only downside is going to be some pain upfront right now," said Orlando. "If we do as we say, we can wash that out in the near future, but you can’t take it back."
What does the increase mean to your tax bill? It means the average home and business worth $250,000 last year will see its taxes go up by $24 in 2015. That wasn't the end of deliberations. Council also had to approve water, sewer and garbage rate increases.
The water bill is going up to $385 from $369. The sewer rate is going up to $245 from $235, while the frontage rate is going up 10 cents to $1.50 per foot. The garbage rate is being increased $2 to $110.
The budget will now go out the public for comment. It must be adopted by council by May 15.
What's in the budget?
Our article on the 2015-19 Financial Plan mostly looks at the debate surrounding tax levels. But what about spending? Here's a look at some of the items in this year's budget:
— The plan includes $23.18 million in spending and a small $20,000 surplus in 2015.
— Service levels remain the same. That means the same level of snow removal, landscaping, pool hours, etc...
— At $7.3 million, staffing is easily the city's biggest expense.
— The $4.15 million capital budget for 2015 includes the Kovach Park washrooms ($130,000), Hillcrest water project ($125,000) and the pump track ($17,000). The big expense in the water budget is replacing the pipe across the Illecillewaet River at a cost of $550,000. Capital spending is also planned for roads, sewer and water projects.
— As reported on page four, city hall renovations have come in at $110,000 under budget for 2015, and the rest of the renovations (moving council chambers, installing an elevator and renovating the finance department) have been delayed by at least a year while council gives them a more thorough study.
— The Big Eddy Waterworks is included in the budget for 2017 at a cost of $4.5 million — less than the $5.7 million initially projected.