Prince Rupert City Council has given three reading to bylaws that will amend its five-year financial plan and raise taxes by 2.4 percent in 2011.
Final adoption of the bylaws must take place by May 15. At the next council meeting on May 9, the public will have the opportunity to comment on the bylaws.
After much debate about where and how the budget should be trimmed or how much taxes should be increased, the final votes for the bylaws resulted in 3-2 each time.
Councillors Gina Garon, Anna Ashley and Nelson Kinney were in favour, while Sheila Gordon-Payne and Kathy Bedard were opposed.
Staff had proposed four tax rate scenarios, with 4.4 percent being the highest and 2.4 percent the lowest. Councillors Bedard and Gordon-Payne favoured a higher increase.
To lower the tax increase, some suggested amendments to the budget included cutting $50,000 from the $911,000 Parks Budget, $100,000 from the $2,127,000 Roads budget or saving $100,000 by not hiring an RCMP officer to fill a position that is presently not being paid for by the City, but through other sources that won’t be available in the future.
Councillor Ashley felt roads and parks could be trimmed, but keeping the RCMP officer was a priority. Councillor Garon wanted taxes kept as low as possible, but thought roads were a priority.
“If we hold the line on taxes, maybe we’ll get more people and businesses to move here,” Garon said.
Councillor Gordon-Payne said if taxes are kept low then staff would have to be laid off.
“Seventy to eighty percent of our budget is staff. If we really want to keep taxes low, unless we basically destroy all the tools our staff has to work with, then we need to lay off staff. If we’re not giving direction to cut staff then we’re already affecting everything by saying to keep the tax rate low,” she said.
For Councillor Bedard, reducing infrastructure costs was a concern because it’s an area of the budget that’s being reduced continuously.
“We’re looking at the meat and potatoes of a budget,” she said, adding that in 2010, council approved $1.5 million in community grants and tax exemptions, before it knew what the 2011 budget would look like.
“I think we need to do something different in advance of what we really know. I would like to reverse that and make it more tied to what we are responsible for such as infrastructure and if there’s money left over then we can use that for grants. We are putting other organizations in front of our responsibilities,” Bedard said.
Councillor Gordon-Payne asked if that’s the thought with grants then could grants be cut midway through.
Mayor Jack Mussallem responded it was a little late, considering some groups will have already moved forward relying on the Community Enhancement grants.
One of the heavily debated items in the budget was Watson Island, where revenues are expected to increase in 2011 from $353,310 in 2010 to $1,107,000 in 2011. Costs are also expected to increase from $1,037,948 to $1,225,000 due to compliance with Ministry of Environment requirements and impending lawsuits with former owner Sunwave Forest Products and Kitkatla.
Chief Financial Officer Dan Rodin said if the City continues to loan the site for the entire year to the partnership with Lax Kw’alaams, Metlakatla and the Prince Rupert Port Authority, that will continue to fund a portion of the carrying costs, as well as continued revenue from the Quickload Transloading Facility located there.
Referring to it as a red flag, Councillor Sheila Gordon-Payne responded if the City is continuing to count on tax revenue from Watson Island that hasn’t actually materialized, she’d rather increase taxes and rely on real money.
“We need to be aware as a community that we’re playing the odds and there is a risk here to our community. I would likely come into something close to a four percent tax increase,” Gordon-Payne said.
City Manager Gordon Howie reported that in 2010, the City did not receive the dividend from CityWest, which it normally does. In 2011, however, the City will receive $1 million from the company.
“CityWest was unable to advise council last year that the dividend would be paid. Since then CityWest has negotiated new bank arrangements with a different bank and that’s why we’re in the position in 2011 to declare a dividend,” Howie explained.
Mayor Jack Mussallem asked if the non-payment from CityWest in 2010 impacted the budget going forward and heard “no” from Howie.
That raised additional concerns from Councillor Gordon-Payne.
“How could we possibly have finished 2010 without being paid a million dollars that we expected and still be fine?” she asked.
Rodin said the 2010 financial statements will show that the impact of not receiving the dividend in 2010 meant the City had to eat into its accumulated surplus for the year to balance the budget.
Again Councillor Gordon-Payne referred to Watson Island and asked if the City is including tax revenue from the site that it hasn’t received to make up that surplus.
“That’s correct,” responded Rodin, but added that the City finished the year with a cash surplus of $2 million in gas tax money.
Councillor Gordon-Payne recommended that during the next council meeting someone from the CityWest come address council about the dividend process, and the strength of the company.
“Given that our expected dividend did not occur for 2010,” she said.