Kelowna.com Tuesday, December 29th, 2009 | 6:40 pm
PORT ALBERNI – A Port Alberni city councillor wants to roll back municipal wages and hike taxes to compensate for $3.3 million it is owed by Catalyst Paper. At a council meeting Tuesday in the central Vancouver Island community, Coun. Jack McLeman outlined his motion to cut city employees' wages by 10 per cent, with benefits remaining the same, and increase commercial and residential property taxes. In both cases, the money would be refunded to city employees and property owners when Catalyst pays up, McLeman explained. The proposal rests on the city's need to borrow money to cover the $3.3 million shortfall, until such time as Catalyst pays its back taxes. "I think this is a notice that has to be brought forward," McLeman said. "People can tell me I'm wrong or they can tell me I'm dumb."
Catalyst,the biggest producer of paper in the province, was supposed to pay $4.8 million in taxes to Port Alberni in 2008 – as well as $5.9 million to North Cowichan on Vancouver Island, $3.7 million to Powell River on the Sunshine Coast and $4.8 million to Campbell River, also on Vancouver Island. Instead, it paid just $1.5 million to each municipality, arguing that the system by which the municipalities calculated industrial taxes was unfair. Last week, the B.C. Supreme Court declared the taxation bylaws of Port Alberni, Powell River and Campbell RIver valid. An Oct. 16 ruling upheld North Cowichan's taxation bylaws. But since Catalyst plans to appeal the rulings, the communities are still scrambling to balance their books. West Fraser Timber and TimberWest Forest are also withholding property taxes in the communities where they are the dominant employer and largest taxpayer.
Following Tuesday's meeting, McLeman said he had previously brought the matter up during a closed-door council meeting, and was urged to keep the proposal under wraps for the moment, however he felt it had to be discussed. He said his plan, which will be discussed at the next council meeting, would only be a temporary measure. He said he believes Catalyst will eventually come forward with the money. "They've got to pay," he said.
Meanwhile, an agreement between Celgar's pulp mill and the City of Castlegar in B.C.'s East Kootenays to pay $400,000 on its overdue property tax bill will help the municipality cover its school and regional district taxes, officials said Tuesday. But the mill still owes $2.8 million that the city needs to pay 40 per cent of its annual operating costs, Mayor Lawrence Chernoff said. Still, both Chernoff and Celgar's managing director, Al Hitzroth, pointed to the payment as a big accomplishment. It's not only the first step toward a settlement in Castlegar, where the mill withheld payment to protest high industrial taxes, but also the first in any of B.C.'s several mill towns that are locked into similar disputes. Both men said in interviews that the city didn't make Celgar any specific promise in return for its $400,000 payment. Castlegar currently taxes Celgar and its one other industry, a smaller sawmill that is now closed, at a rate about 10 times higher than what residents pay. That's down from about 12 times higher, and it's on the low side compared with North Cowichan, where the industrial rate is 28 times higher than the residential. Hitzroth said, however, the city now understands the mill's position that it can't stay in business if the tax burden remains so high, and he in turn understands that it will take time to change the tax system.
In the short term, he conceded, there may be only three options for the mill to pay, for the city to do without, or for the province to bridge the gap. But over the slightly longer term, with a little time to make adjustments, he said, there are options. For one, some of the tax burden could be shifted to other classes such as business and residential. For another, the city could spend less. Chernoff said the city urgently wants to lessen its dependence on its biggest taxpayer, but Celgar's withholding of so much tax money compounds the challenge. "We didn't do any capital works this year," he said. "We just couldn't afford it. So we want to attract new employers, but we don't have the money to provide new infrastructure."
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