Council flirting with 2% tax hike

Ron Seymour   2010-12-09 Kelowna Daily Courier:
Kelowna homeowners could be looking at a $30 increase to their municipal taxes next year. City council has instructed staff to prepare a 2011 budget that provides for a tax hike of no more than two per cent, Mayor Sharon Shepherd said Wednesday.  "The direction we‘ve given staff is, ‘Don‘t expect that we‘re going to be in agreement with any tax hike beyond a cost-of-living increase,‘" Shepherd said. "And preferably, the increase would be below that."  This year, the owner of a typical single family home with an assessed value of $485,000 paid $1,585 in municipal tax. A two per cent hike would result in a municipal tax payment of $1,616.  This figure does not include other charges that appear on the tax notices mailed to property owners each July. Those levies, for such things as the school board, hospital board, and regional district, typically almost double the total tax bill.

Preparation of the municipal budget is a months-long process that involves the scrutiny of all city operations, finance director Keith Grayston said.  "Each department is encouraged to review all of their areas and look for efficiencies," Grayston said. "Managers look for different ways of doing things that might provide better services at the same cost, or a reduced cost." Linking city spending to the inflation rate is a challenge, Grayston said, because a municipality does not typically buy large quantities of the kinds of items included in the calculation of the Consumer Price Index.  Before the recession, the pricing of concrete, asphalt, steel, and other materials needed for large scale infrastructure projects was rising much faster than the CPI, Grayston said.  "A few years ago, construction costs were increasing 25 per cent annually," he said. With the building slowdown, those costs have fallen back, and the overall inflation rate is remaining in the two per cent rage. "That does help to keep our costs down, obviously," Grayston said.  The city has still not reached a new collective agreement with its unionized workforce, but the 2011 budget will include an estimate that covers additional expense in that area, as well as other programs where the costs going forward are not yet known.  The provisional 2011 municipal budget will be available at City Hall tomorrow morning, and council will spend all-day next Thursday going through the documents, reviewing items on a line-by-line basis.  In eight of the last 11 years, council has provided for annual budgets that resulted in a municipal tax increase of less than two per cent. "We‘ve always tried to bring it in at a reasonable level, recognizing that everyone has their own demands and expectations regarding city services," Shepherd said.

Increases in the municipal tax rate for the average Kelowna homeowner over the past decade:

2010 - 1.6 per cent  2009 - 3.5 per cent  2008 - 5.7 per cent 2007 - 2.8 per cent 
2006 - 2.0 per cent  2005 - 1.9 per cent  2004 - 1.7 per cent  2003 - 1.9 per cent 
2002 - 1.6 per cent  2001 - 1.9 per cent  2000 - 1.8 per cent