Council could have gone further with its tax increase reduction

Jason Luciw - Kelowna Capital News Published: February 05, 2010 11:00 PM

Don’t be fooled by the apparent tax break council doled out this week when it decided to increase West Kelowna taxes by 3.75 per cent instead of five per cent. The fact is council could have given you an even bigger tax break, increasing taxes by only 1.25 per cent by my estimation, but they chose to spend more of your money instead. At the end of 2009, council had $1.33 million left over in its budget. Yes, they collected that money from you last year, but $800,000 of it went unspent because one-time projects weren’t deemed a big enough priority to carry out or because they found “efficiencies” in some departments. Efficiencies usually mean they didn’t have to hire staff and buy office equipment and furniture. The other $330,000 was the amount remaining in a council contingency fund.

Council chose to keep the $330,000 in its contingency. With the $800,000, it chose to give $240,000 back in the form of a tax break and spend the other $560,000 by adding more staff to its payroll for positions like geographical information systems technicians, engineering and planning staff, clerical support and a fire inspector. The $90,000 fire inspector is about the only added position I agree with because part of that role is reported to be public education, helping to reduce forest fire risks on private property. Given last year’s forest fires and this winter’s lack of snow, I think the role is essential and well worth the price.

That would have left $470,000, which council could have used to reduce taxes by approximately two per cent more. That would bring this year’s tax increase down to 1.75 per cent. The other 0.5 per cent would have come from reducing council’s contingency down to about $150,000. That’s still plenty of money in the kitty to pay for the unexpected, especially since council only spent about $1,500 of its contingency last year.

Now, council will tell you that if it reduced the tax increase any further than 3.75 per cent, it would have impacted negatively on reserves. But I don’t buy it. Remember, this is leftover money that we’re dealing with and additions to reserves are already accounted for in the 2010 tax requisition. Taking surplus money that wasn’t spent last year and hiring more staff doesn’t help reserves either, just like taking surplus money that wasn’t spent last year and giving it back to taxpayers wouldn’t hurt savings accounts.

So what does a 1.25 per cent tax increase look like to the average taxpayer, compared to a 3.75 per cent increase? Let’s do the math. The B.C. Ministry of Community Development says a representative house in West Kelowna was assessed at $492,000 and the owner paid $1,354 in municipal taxes in 2009. So, a 3.75 per cent tax increase would be just under $51. A 1.25 per cent tax increase would be about $17. Now, $34 might not seem like a lot of money to some. And to them I would say go to the bank, withdraw a crisp green $20, purple $10 and two shiny twoonies and hand them over to the municipality. But I’m guessing many people out there, during a period of fragile economic recovery, could find better ways to spend their own money.