By SCOTT TRUDEAU Wednesday, March 18, 2009 Penticton Herald:
A tax increase of 2.37 per cent marked for the 2009 budget was opposed by a trio of Penticton city councillors. A recommendation was made that the 2009 - 2013 five-year financial plan be prepared and read for a first, second and third time at Monday’s city council meeting. It was revised after Coun. John Vassilaki motioned that only a first and second reading of budget should occur at this time. "I am not anywhere’s near satisfied with the number of 2.37," said Vassilaki. "I’ve got some items here that can still be removed from the budget without creating concerns for the citizens of Penticton." He said having first and second readings gives council two more chances for budget deliberation, and "to bring it down to my level of comfort, which would be zero." The tax increase is broken down as follows: South Okanagan Events Centre (.67 per cent), the Lakeview Cemetery columbarium (.65 per cent), the industrial area upgrade, (.58 per cent), the Elm Avenue parkland purchase (.24 per cent) and the indoor sports facility (.23 per cent)--all to service debt commitments incurred by the previous city council.
This includes $640,598 being transferred from the accumulated surplus account, and an amendment that the city’s Reserves Fund Policy is reduced to the minimum level of accumulated surplus to $995,000. A transfer of $300,000 from the accumulated surplus account was incorporated into the budget and included in the $640,598. City treasurer Doug Leahy, who presented council with an overview of the budget, that the economic downturn had a substantive impact on achieving a balanced 2009 budget. Therefore, several one-time only adjustments totalling $1.8-million were made. However, in order to maintain the city’s operations in 2010, money will either need to be found within the budget, or taxes would have to be raised by eight per cent. Offsetting amounts could come due to an increase in building permits, the impact of reduced payroll due to 2009 staff cuts, the availability of capital funds from the electrical fund and additional revenue increase resulting from comments and suggestions received during this year’s budget deliberations.
In 2000, a Surplus and Reserve Policy was adopted that established for the minimum balance to be 10 per cent of operating expenses which equates to $3.8-million for 2009. The policy was developed to allow for the balance of the surplus to fund at least one month of operating costs and to minimize the city using a line of credit prior to it collecting tax revenue at the end of July.
Coun. Dan Albas thinks there is room to trim more from the budget. "Even though I’m happy that we’ve engaged the process ... I’m not satisfied," he said. "I believe that we’re reigning in costs, but there’s still an over reliance on transfers from surplus so I don’t think we’re becoming as lean as we could." Coun. Gary Litke said he is opposed to a number of things that have happened along the way. Of those, he cited elimination of the city’s arts and cultural officer as one bone of contention, and also the reduction of grants to events and organizations and the 25 cent increase in public transit fees.
"Particularly, I’m opposed to a change in (surplus and reserve) policy that is taking place without really any debate," he said. "This is a policy that’s been in place since 2000. It’s a safety net for us; it’s a piggy-bank if you want, and now we’ve dipped into that piggy bank without regard for the effect that might have on the future." Litke would rather see gradual tax increases rather than a sudden spike possible for 2010. Albas and Litke opposed the recommendation that the financial plan for 2009 - 2013 be introduced and read for a first and second time. Other budgetary items included general capital expenditures for 2009 which are $12.6 million. The amounts for projects that have not been completed in 2008 and have been carried over total $9.5 million. The budget includes final contribution from the electrical fund of $2 million for construction of the events centre and the current year’s contribution of $1.2 million transferred from the electric fund for 2009 capital works. Operating expenses, excluding reserve transfers and grants total $45.3 million, compared to $41 million in 2008. Debt servicing has increased $4.3 million. The city is eligible for a gas tax rebate of $931,630 from the federal government.
Leahy called the 2009 budget process "unprecedented in the amount of public and staff input sought," adding that more than 450 comments were received during budget deliberation, and have either become a part of the budget, or will reviewed by staff and council this year in leading up to the 2010 budget. Mayor Dan Ashton stated that input regarding the budget can be received until it is adopted April 15.
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