Taxing time in Kelowna

Ron Seymour 2008-05-06 Kelowna Courier

Kelowna homeowners will see their municipal taxes rise at least 12 per cent during the next four years, city council heard Monday. A financial plan forecasts a tax hike of four per cent in 2009, followed by subsequent annual increases of four, 2.2 and two per cent. “We are being as fiscally responsible as we can,” Mayor Sharon Shepherd said after the council meeting. Spending on the new Mission Aquatic Centre accounts for much of the predicted tax increase, she said. Without that, she said, tax hikes would be inline with recent annual increases of about two per cent. However, the projected tax increase of 12.2 per cent between 2009 and 2012 is based on the city providing the current level of services. Any decision by future councils to expand services or add new ones would create upward pressure on municipal taxes.

The tax increases outlook was presented as council gave final approval to this year‘s budget, which contains a municipal tax hike of 5.7 per cent for the typical homeowner. For someone whose home has increased in assessed value to $494,000 from $422,000, the municipal tax bill will go up $85, to $1,582 from $1,497. Their total tax bill, including charges for the school board, hospital board, and regional district will rise to $2,374 from $2,252, after application of the homeowner grant. “Like everyone else, I don‘t like to see taxes go up,” said Coun. Norm Letnick. But, echoing comments made previously by finance staff, he said the city has to buy large quantities of material such as concrete and steel, which have risen in price faster than the inflation rate. Given these realities, Letnick described the 5.7 per cent tax increase as “prudent.”

In recent years, the city‘s policy has been to direct half of all taxation revenue from new construction toward capital costs. However, this year, virtually all of that money is going toward operational costs. If that trend were to continue, many projects identified in the long-range capital works plan could not be built. So, finance director Paul Macklem said it was an “opportune time” for council to soon consider both the capital works plan itself, and the long-standing approach of using 50 per cent of new tax revenues to support it.