The City of Prince Rupert is not anticipating raising taxes on residents and businesses for this upcoming budget year.
The City’s chief financial officer Corinne Bomben detailed the preliminary 2016 budget in a presentation to council on Feb. 22.
“We are pleased to announce that our budget is balanced for 2016, therefore there is no necessary increase to the mill rate for operations,” she said.
Due to continued funding from grants, reserves, dividends (such as an anticipated $400,000 dividend from CityWest), general operating and operating surpluses, funds from Prince Rupert Legacy Inc. for the Planning for Major Projects initiative, a non-market change in assessment resulting in a property tax increase in revenue and taking into account expected revenues and expenditures for normal service operations, the tax rate won’t be raised.
However, there are many challenges the City faces on a continuous basis that is causing strain on the revenues and expenditures process and it’s forcing senior staff within the City to keep a ‘status quo’ budget in mind.
“This has been the practice for many years and staff are well aware that ‘nice-to-haves’ are still not an option. Rather, ‘must-be-done’ is the driving force behind the City’s service provision,” Bomben wrote in her report.
Chief among the taxation challenges facing the City is the provincially-capped major industrial mill rate for all municipalities with the qualifying import-export property, with all major industrial properties (tenants of the Port of Prince Rupert) in the City’s jurisdiction falling under this capped rate.
“These flat mill rates are levied on assessed values that depreciate, meaning they go down every year. A flat mill rate on a declining assessed value results in less taxation,” noted Bomben.
The City is compensated for this cut industrial mill rate through the Competitiveness Grant distributed by the Province to avoid massive tax increases to the City’s other tax classes.
While industrial assessments on these properties decline year-by-year, resulting in less taxation paid by the heavy industrial tenants, the burden of making up the same amount of tax collection (let alone accounting for inflationary costs) is transferred to the other classes.
“This is a large contributing factor behind why taxes on the residential, business and light industrial classes in Prince Rupert continues to increase without any noticeable change in services provided,” said Bomben.
City staff are also recommending a “modest increase” of two per cent to the mill rate for future infrastructure needs and “allocation to reserves solely to mitigate large one-time tax increases in the future”. The City’s infrastructure deficit stands at $250 million.
“We cannot continue funding capital with reserves and surplus because they are not unlimited and we cannot rely on grants. We need to save for future capital replacement,” said Bomben.
The mill rate must be adjusted to achieve the same amount of taxation revenue as in 2015, which was $15,043,000.
After implementing the recommended increase for infrastructure reserve replacement, the proposed municipal mill rates for each class are as follows (with 2015’s municipal mill rate in brackets): residential – 6.8816 (7.38384), major industrial, non-capped – 52.4413 (50.18427), light industry – 28.85808 (30.52733), business – 25.87597 (25.80240), and non-profit/recreation – 5.23987 (4.81863).
The rates may adjust based on finalized BC Assessment property values expected to be released March 31.
“Many home values did increase during the year. However others stayed the same or decreased. This is why it is important to calculate the expected value of taxes individually to determine the impact to each property owner,” said the chief financial officer.
City councillor Blair Mirau noted that the tax sharing agreement between the City of Prince Rupert and the District of Port Edward for Ridley Island is significant, with 17 per cent of taxes collected by the City from Ridley Island going to Port Edward. Last year, this amounted to $700,000 noted Bomben.
“That’s a very tangible amount of money that has a significant impact on the City of Prince Rupert and I think it warrants some further discussion,” Mirau said.
Bomben said she would draft a report regarding the historical details behind the agreement in time for the City’s first budget public consultation opportunity, scheduled for March 14 at 7 p.m at the Lester Centre for the Arts.
The second public consultation opportunity will be held during the regular meeting of council in council chambers on March 21 at 7 p.m.