Staff report boils budget down to three issues

Snow removal costs balloon after heavy snow year, Downie Timber appeals for tax reduction and council asked to decide on tourism coordinator position. Budget comments call for specific city spending reforms and reform of the budget process overall.

City budget discussions will restart on April 19 after a hiatus during the 30-day public comment period. It appears the three main outstanding issues council will grapple with are tax rates for Downie Timber Ltd., funding for the Revelstoke Chamber of Commerce’s tourism coordinator position, and an increase in the snow removal budget.

The 2011 financial plan process experienced much more public input compared to the past two budget cycles under the current council, but in the end it resulted in only eight official written comments — up from just one the year before.

The city’s finance director Graham Inglis has prepared a report to be discussed by the city’s committee of the whole on April 19. Inglis outlines several issues for committee and council discussion and deliberation.

Downie Timber Ltd. taxation

A letter from Downie Timber Ltd. signed by Jack Heavenor and Ron Gorman asks council to reconsider their decision to hold the industrial property tax rate to a zero per cent increase. They had hoped council would continue to move towards integrating the industrial tax rate with the lower commercial tax rate. Downie is the only industrial property in Revelstoke.

“We were optimistic that Council would move on having Downie at the business rate this year,” they write in a letter to the city dated Mar. 14.

“To tax Downie at a 50 per cent premium to commercial/business rate results in an inequitable distribution of the tax burden,” the letter states. “Downie is a primary producer of jobs (300 FTE, including logging payroll of $17 million) and general economic activity in the community ($60-65 million per year). To put an additional burden on us makes no sense from an overall community economic perspective.”

Downie owners the Gorman family process lumber in Revelstoke, Westbank and Oroville, Washington. The letter says Downie’s mill rate in Revelstoke is 30.5, while their Westbank operation is at 10.5. Their rate in Oroville “is much, much lower.”

“Our major competitors in high value cedar products have all relocated their value-added processing to cross border communities that are separate from the sawmill location,” the letter states. “In spite of the high Revelstoke industrial rate property taxes, Downie and Selkirk have kept the value-added jobs in Revelstoke. The decision has benefited both our employees and the community, but Selkirk has paid a significant economic price for that decision.”

A report from finance director Graham Inglis notes the history of Downie’s taxation situation, which includes significant fluctuations.

Back in 2000, Downie’s assessment was $5,870,300, and the taxes levied were $218,365, or around 6.5 per cent of the total tax burden.

By 2005, after some investment in the mill, Downie’s assessment had jumped to $9,201,300 and taxes had increased to $553,057, or 10.86 per cent of the total tax burden.

According to Inglis’ report, in around 2006, Downie began actively lobbying the city for reductions. By 2008, they were down to $480,876, or 7.52 per cent of the total tax burden. In 2009, it was down to $404,241 and 5.54 per cent. By 2010, $315,424, or 4.14 per cent. Downie’s share is “likely to decrease to 3.98 per cent” in 2011, writes Inglis.

In one of three options presented to council, Inglis says they could investigate a further reduction for Downie. “This would require further discussion on how this would be funded,” Inglis writes.

Chamber of Commerce tourism coordinator position

The Revelstoke Chamber of Commerce has lobbied for the reinstatement of $30,000 in funding for their tourism coordinator position. The city and the chamber have some disagreement over the status of the funding, which started in 2001. “The subsidy was to last for 10 years,” writes Inglis. “After about two years the chamber of commerce approached the city and asked that the subsidy not be reduced. The city agreed, although the amount received from the CSRD continued to reduce, leaving the city with an increasing share of the cost.”

The report presents options to council that include leaving the funding out, or putting it back in.

City snow removal budget

Inglis’ report recommends increasing the city snow removal budget from $908,000 to $1,258,000 for 2011. As of April 12, the city had spent $1,038,776 during this very snowy season, and more snow removal and clean up is expected to reach $1,258,000.

Other issues and comments

Several other letters were received:

The Revelstoke Youth Soccer Association expresses concerns about possible negative impacts to soccer fields, although a subsequent letter appears to clarify their position after getting other “important information.”

A letter from the Revelstoke Aquaducks swim club says they are pleased the budget will not include cuts that will affect their program.

A letter from Revelstoke Bear Aware thanks council for including funding for bear-proof garbage cans in the draft budget.

A letter from the Revelstoke Accommodation Association requests that funding for the tourism coordinator position remains in the budget.

A letter signed by Dale Morehouse and Jim Cook encourages the city to overhaul the way the budget process works in the city. They present a system outlined by a national budget advisory body. The system would peg the budget process to four principles and 12 elements.

Their letter also says the city has the second highest debt per capita in B.C., something they say is unsustainable. They also claim city spending has increased by 89 per cent, though a timeframe is not included.

And last but certainly not least, resident Bob Melnyk was present for the majority of city budget discussions, and he’s prepared an eight-page report commenting on the draft budget.

Melnyk makes many recommendations to council, some broad-ranging, and others quite specific. They include:

– He recommends an external audit of the fire department, saying their budget has increased 66 per cent since 2006.

– He points out a 32 per cent increase in the Parks & Rec budget since 2006 and recommends specific cutbacks, such as replacing labour-intensive flower gardens with shrubs.

– He recommends an audit of the Public Works department, focusing on a 109 per cent increase in the budget since 2006.

– Melnyk makes very specific recommendations on improving snow removal, noting his experience in the field.

– Melnyk also makes similar cost-saving recommendations for water and sewer projects, and criticizes the city’s involvement with their current contract engineering firm.

– He recommends cancelling $55,000 annually for five years for bear-proof garbage cans.

– Melnyk says city department directors failed miserably when asked to provide city council with five- and 10-per-cent cut scenarios. “None of these managers offered a single proactive solution,” he writes. “The resulting display of offerings were nothing short of political hot buttons.”

– He suggests the city consider selling city hall and relocating to the Court House.

– Melnyk also questions the city’s involvement with RCEC, suggesting selling the plant located at the Downie Timber property to a company needing carbon offsets.

While other letters were addressed in the staff report, recommendations by Morehouse, Cook and Melnyk weren’t. There is also no mention at this point of plans to form some kind  of public budget oversight committee, which was suggested by the special business/resident budget working group that participated in the 2011 budget.

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The city’s committee of the whole is scheduled to resume budget deliberations on April 19. Provincial regulations say the final budget must be adopted by May 15.