By JOHN MOORHOUSE January 9, 2008 Penticton Herald
A plan to delay borrowing up to $3 million for a new wellness centre has enabled Penticton council to reduce the proposed tax bite in this year‘s city budget. Council voted unanimously in a special budget meeting Tuesday to approve first three readings of the budget bylaw which now calls for an average tax increase of 4.95 per cent -- down from the 5.74 per cent included in the draft budget released last month. Jack Kler, the city‘s director of corporate affairs, said a move to delay borrowing for the wellness centre next to the South Okanagan Event Centre until the fall will realize a tax reduction of 0.6 per cent for 2008. Various minor budget adjustments will enable the tax increase to be reduced to below five per cent. Construction of the wellness centre will coincide with completion of the event centre, scheduled for this fall. “It‘s all to do with cash flow,” Kler explained. “We‘ll only have one payment to make in 2008 and originally we had budgeted two payments.”
Council also agreed to hold off on further budget deliberations into how to utilize $250,000 in unallocated budget money. It‘s expected debate into city grant applications will resume on Jan. 21 Ð council‘s next scheduled meeting day. Council will face a difficult task. The supplemental budget list includes more than $1 million in funding requests for 2008, including $473,000 in grant applications. Kimberley said, ideally, he‘d like to see the tax increase lowered to two per cent. However, that is simply not feasible at this time. “This is as tight as we can get this budget without having to make significant cuts to services,” he said. “Council still has a lot of debate on this budget yet. Although we‘re trying to keep it below a five per cent maximum, it‘s tough.” About two per cent of the overall tax increase is earmarked for operational expenses with the remainder allocated to debt payments. The 2008 operating budget includes more than $4.8 million for debt servicing, more than double the $2.2 million budgeted in 2007. The figure is expected to top $9 million in 2009.
Kimberley said by delaying other projects, inflation could cause the costs to skyrocket. “The main issue here is our infrastructure is desperately needing some allocation of dollars,” he said. “To borrow the amount of monies we‘re borrowing right now is frightening, I know, but we‘ve got no real choice. We‘ve got to keep the infrastructure together.” Coun. Dan Ashton noted the tax impact will be even greater for business owners in the city. The business tax rate is 1.85 times the residential rate. While the tax hike works out to $74 for an average home assessed at $354,000, Ashton said an average business owner faces roughly twice that amount in higher taxes. “That‘s a substantial increase to people… that are slugging it out in a sluggish economy,” he said. “At some point in time here, the anchor‘s going to get thrown overboard because I don‘t think we can carry on.” Coun. Rory McIvor noted residential property owners already carry the bulk of city tax revenues. A study two years ago showed residential taxes account for 73 per cent of the city‘s total tax revenue.
Council is also considering whether it could hold back on other projects such as the columbarium-mausoleum at Lakeview Cemetery, designed to hold cremated remains. However, many of the niches in the columbarium have already been reserved. According to the business plan for the $2.5 million columbarium, revenue from the facility will cover the amount required for debt payments. Final figures from the 2007 fiscal year are also being tabulated. It‘s not yet known how much of last year‘s budget allocations will be carried over to 2008.
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