City dips into reserve to avoid further tax hike

Melissa Lampman - Kamloops This Week Published: April 09, 2009

An unexpected budget shortfall has forced the city to dip into its reserve fund to avoid a city tax hike as the result of the tumultuous economy. A half-million dollars has been taken from last year’s surplus to make up for $400,000 in lost investment interest and $100,000 in decreased property assessments. Pulling the funds from the surplus keeps the city’s tax hike this year at 1.9 per cent, dodging an increase to 2.6 per cent — the other option on the table at Tuesday’s council meeting. Mayor Peter Milobar said it is a preferred choice as a one-time measure because it can be a slippery slope if council starts funding ongoing financial matters from the surplus. “And the fact is, it’s too late in the budget process,” he said of raising the city tax rate.

“People know it’s 1.94 per cent. That’s what we’ve committed to them and I think it’s only fair we do that.” From 2008, the city had a $3.1-million surplus, meaning it spent 97.5 per cent of the money that was raised from taxes last year. From that surplus, $1.6 million was used for one-time capital projects this year, leaving $1.5 million. The $500,000 was taken from that and the remaining $1 million went into the general reserve fund, bringing it to $9.2 million. “It’s used for emergency things,” Milobar said.

“The general rule of thumb is the city wants roughly two months of operating costs in the reserve fund in case of some catastrophic event.” He noted city reserves were at $4 million when he first came joined council three terms ago and has since been brought to just more than $9 million. “Optimally, we’d like to have it between $10 and $11 million, so we’re getting closer to that.