Unless major changes are made to the City of Castlegar’s proposed 2019 budget, residents and businesses can expect to see a property tax increase of approximately seven per cent.
Most of the proposed increase comes from a new five year infrastructure investment levy, currently set at 4.42 per cent.
The projected overall increases for the next five years are 7.06 per cent in 2019, 6.97 per cent in 2020, 6.56 per cent in 2021, 5.51 per cent in 2022 and 5.54 per cent in 2023.
The infrastructure investment levy (IIL) is the city’s asset renewal plan to fund the replacement of roads, facilities, parks and fleets. The proposed budget is targeted to meet the city’s infrastructure deficit. The estimated need is $1.25 million annually.
The budget was a matter of much debate at the council table Monday night.
Mayor Bruno Tassone and councillors Cherryl Macleod, Bergen Price and Maria McFadden were in favour of phasing the plan in over five years.
Councillors Florio Vassilakakis, Sue Heaton-Sherstobitoff and Dan Rye preferred lowering the annual tax increase by spreading the program out over seven years.
Infrastructure investment levy debate
“I feel like it is too much, too fast,” said Vassilakakis, who chairs the finance committee. “I am a little bit uncomfortable with what I calculate to be a 37 per cent increase in residential taxation over five years. I think the plan is great, I just think that it is a little bit much.”
Rye said “it is a big hit to our taxpayers and I think we seriously need have to look at cutting some stuff to get that number down.”
Heaton-Sherstobitoff spoke to the fact that the infrastructure deficit has been building for a long time.
“We can’t possibly fill the gap in five years that was started in 1980,” she said.
“I think we need to get down to the bare bones and start cutting from this really aggressive budget.”
“This budget that was presented to us was the ideal situation that staff could see,” said Vassilakkais. “We are here to also represent the municipal taxpayer … maybe if we can push off some of these projects that don’t have a detrimental effect to our infrastructure… then you can take off half a per cent or one per cent.”
Macleod agreed that having money set aside for infrastructure renewal was worth it and for her, it’s part of keeping a campaign promise.
“My understanding is that our infrastructure — that is what most of us ran on — needs a fair bit of help,” said Macleod.
“I ran on fiscal responsibility. I ran on saying I thought we needed to put some money away for asset management,” she added. “Nobody is happy with a tax increase, I certainly am not. But I do feel, that is what I ran on.”
Mayor Tassone brought up the fact that council had increased taxes by a similar amount in 2015.
“I find it interesting that the senior councillors had no problem back then making a 7.45 per cent increase and now we are trying to deal with an issue that is ongoing, we have to move forward with this,” he said.
Rye countered by saying the increase then was just for one year and wasn’t followed up with higher increases in the following years like the current plan on the table calls for.
“We have borrowed money to do capital investment, and that is what we are trying not to do now,” said Tassone. “We are trying to put those increases back in so we can move forward and have money in reserves to do other capital projects in the future.”
Vassilakakis argued that he felt that taxing today’s taxpayers for a project 20 years from now was not the best way to do things.
“Do I feel 35 per cent over the next five years is a little aggressive?” added Price, who supported the five-year IIL plan. “Yes, I definitely do, but I feel it is a good starting point and the objective here is to deal with our infrastructure.”
Some councillors also pointed out that infrastructure deficits are a problem almost every community across the country is facing and that compared to others, Castlegar isn’t in bad shape.
Vassilakakis also spoke to the burden being placed on the business community, which is already facing the province’s new two-per-cent health tax.
“Even the reduction of one per cent makes a difference,” he said.
For the first year, the tax increase doesn’t seem so dramatic. For the average Castlegar home, it will cost about $75.
But it is the continued cumulative increase for the next five years that most concerns those opposed to the plan.
“When you look at it over a five year stretch, you are talking about a $400 difference between now and 2023 when this ends,” said Vassilakakis.
Castlegar CAO Chris Barlow said the projected increases are based on the current tax roll. Any new construction in the city can lower the increase, as along as new spending is not introduced.
Major industry is currently funding 29 per cent of the municipal budget and the proposed budget plans to keep that ratio in place. So industry will also see a tax increase, but the total amount of the budget it provides for will remain stable.
Barlow also said that even if the proposed tax increases go through as they stand, that Castlegar will still in in the bottom third of Kootenay municipalities as far as total taxes paid.
“When you consider the services our city provides,” added Barlow. “I believe Castlegar is very competitive when compared to our neighbouring communities.”
The city is also in the middle of collective bargaining with its unionized workers, and the result of those negotiations may also have an impact on the bottom line.
As council continues to debate the budget and settle on a final proposal and people in the community continue to demand more services, an important figure to keep in mind is that for every $75,000 in new spending, the tax rate must be increased by one per cent.