A 2.5 per cent annual tax increase proposal was defeated in Prince Rupert’s council meeting on Oct. 15.
Corinne Bomben, the city’s chief financial officer, had presented her ‘Financial Stability and Resiliency’ policy in the September council meeting, which dealt with the city’s financial planning.
The policy suggested a consistent minimum 2.5 per cent tax increase for the first five years, followed by a two per cent increase thereafter. If approved, city staff would use the increase to plan future budgets, but with city council still retaining the discretion to approve the tax rate and budget final.
The objective was to develop principles to guide the city so taxpayers can rely on predictable, stable, and accountable property taxation and avoid sudden spikes in taxes. These principles would also support decision-making, providing continuity and assurance to the city’s financial management and a long-term framework to ensure the city operates within budget guidelines that balance services, infrastructure investments, and tax rates, the policy stated.
It would allow the staff to begin financial planning with a 2.5 percent increase instead of a zero percent increase because this generally aligns with the minimum rate of contractual increases the city faces. Two per cent of the increase proposed in the policy would go toward running the city and its services, while 0.5 per cent would go toward capital reserves.
Capital reserves are used to finance big future projects such as fixing old buildings, roads, water systems, etc. However, if the city received more revenue from non-market changes such as major industrial classes, new buildings, or developments, the city would put that toward capital reserves rather than increasing taxes for taxpayers.
The policy did not apply to the water, wastewater, and solid waste utilities, as their operations are funded through user fees. The capital component of those programs would be financed by a combination of user fees, capital reserves, grants, debt, municipal enterprise dividends, accumulated surplus, and asset management reserves established for each program.
The six councillors debated the request extensively. Coun. Reid Skelton-Morven argued it would help avoid tax jumps that hurt fixed-income residents the most.
Coun. Nick Adey thought this might not be the best time to concern the public with tax growth when the city's water system is already disturbed.
Coun. Wade Niesh also argued against the policy.
"People expect taxes to go up so I think people are going to expect a 2.5 per cent increase regardless," he said. "So to put a policy in place, what it's doing is it's allowing the staff to increase everything 2.5 per cent and more possibly. And I think that every year the staff has to look at it and scrutinize it before it even comes to us. At the end of the day if we have to increase it 2.5 per cent, I'm not necessarily opposed to that, I just don't think there should be a policy in place."
Mayor Herb Pond suggested it was a good way to manage expectations.
"It's a policy, its a guide and council's always free to override its policy," he said.
He added the purpose was to set out expectations that costs go up every year. "Unless we find additional revenues or ways to do things cheaper, more money will be needed, anticipating an increase in taxes."
The mayor confirmed that regardless of whether the policy was passed or not, staff will present the budget to council as usual. A number would not bind council and it would analyze every aspect of an increase before deciding the actual percentage to implement. The resulting tax increase could be more or less than a pre-decided number, depending on the needs and conditions of a specific year.
The policy failed to pass with Mayor Herb Pond and Coun. Skelton-Morven in favour and the other five councillors against it.
