Tax decrease means service reduction

by Wayne Moore - Castanet  Jan 4, 2012 / 1:00 pm

Services within the City of Kelowna will suffer if a proposed tax decrease is ultimately approved by City Council. The city's provisional 2012 budget, released earlier this week, calls for a 0.04 per cent tax decrease. Financial Services Director, Keith Grayston, who will officially present the provision budget document to council Monday, says service cuts are inevitable any time a budget comes in right around zero. "There are those built in cost increases that are there every year, so having a zero doesn't mean status quo. It means a reduction in services," says Grayston. When the budget process began in the summer, the previous council asked city managers and department heads to find ways to trim budgets within their respective departments. Grayston says it was a difficult process. "It required everybody to take a hard look at everything that gets done and determine what could be done without. It was a difficult exercise for a lot of departments because everybody is passionate about the services they provide and nobody wants to see a reduction in some of those service levels," says Grayston. "After a while, you have to recognize that some programs maybe have outlived their usefulness or, perhaps can be changed somehow or some efficiencies found. Every year we look for efficiencies to try and reduce the impact but this was a concerted effort for this year." While the tax increase is virtually zero, the taxation demand has increased $912,000 from $96.7M to $97.6M. The difference is offset by an increase in new construction tax revenue of about $950,000. Due to the sluggish economy, Grayston says the new construction revenue increase is significantly lower than it has been. Over the last five years, Grayston says new construction tax revenue has averaged between $2.5M and $2.6M.  He says the city's new Official Community Plan does not project growth the way it has been of the past 10 or 20 years. As for service cuts, Grayston says those will affect different people in different ways. "From transit to street sweeping, there are different impacts that will be felt. Council will wrestle with that and see if they can support those service levels." Grayston says cuts do not mean wide sweeping layoffs at City Hall. "We're not looking at going and making wholesale cuts in staff levels. The area that has had the biggest impact in staffing reductions is in Development Services," adds Grayston. "That is an area that is dependent on growth. Some of those areas like Development Services where people are coming in for permits, if nobody is coming in then it's a an area that could see a reduction without seeing a lot of service impacts." One area that could affect the budget is policing. At the present time, a request by RCMP Superintendent Bill McKinnon for four new officers with a budget impact of $415,000 is not being recommended. If council were to approve the request, it would mean an addition tax increase of about .4 per cent. A one per cent tax increase equals about $968,000 in additional spending.