Trent Ernst, Editor
Council is heading into the final stretch with their 2016 budget. While things are not set in stone until the budget bylaw has been passed, the budget appears to be close to its final form.
Residents of the town will be glad to know that taxes won’t be going up for 2016. Of course, they aren’t going down, either. Council has held to a zero percent increase in the amount paid.
This does not mean, acting CFO Chris Leggett is quick to point out, that the mill rate will remain unchanged. “The mill rate is just a plug in the whole equation that allows you to do the calculations,” he says. “Let’s say you want to collect 1.5 million in property taxes from class X. We take the average property assessment of that class, then the total number of properties, and we calculate how much needs to be paid for each property. The mill rate is just what is needed to achieve that end result revenue.”
If City A has a mill rate of 2.5, and the average property value is $200,000, while City B has a mill rate of 5, but the average property value is $100,000, people looking at just the mill rate could make the argument that City B is gouging taxpayers. “But in truth they’re both paying the same amount of taxes.”
The increase in the mill rate is not because the town has raised the amount of taxes that the average tax payer is paying (the average property owner is still paying about $803), but because the value of the average property has dropped across the board.
While most of Council was satisfied with freezing the tax rates for 2016, not everyone was. Councillor Will Howe proposed dropping residential tax rates to zero.
“This municipality is flush with cash,” he says. “We don’t need to collect as much money as we do. We had a roughly $5-million surplus from last year. This year we’re talking about taking in an extra $300,000 that we didn’t foresee. We’re taking in an extra $450,000 in investment income that we didn’t last year, based on stuff that was generated from Council, and we’ve just seen $2-million come in from the regional district as part of our budget, so I’d like to see us do something really meaningful for our residents. I’d like to see us reduce our residential taxes to zero for the upcoming year.”
This, he says, would result in a decrease of about $1.1 million to the District. “But we are able to spend, without even blinking an eye at it, a half a million dollars on tourism related expenses.”
He says he knows Council would be super unpopular when things turn around and the District raises taxes when people are doing better. “But they’re not doing better right now. This is something we can actually do to help people now. The people who live here, instead of constantly doing stuff for tourists.”
The idea was discussed, but ultimately rejected by Council, as was a proposal to raise the Light Industrial tax rate by Councillor Mackay in favour of holding taxes at zero.
One of the largest investments in infrastructure ever.
In 2016, says EDO Jordan Wall, Tumbler Ridge will be commencing one of the largest steps forward in the repair and replacement of capital assets since the creation of the community.
“This year will see a complete core services review, the installation of a new Supervisory Control And Data Acquisition (SCADA) system to monitor water safety, the installation of new blowers to ensure residents can use their toilets, installation of LED lights that are estimated to save the community $900,000 over the next 10 years, the replacement of a damaged walking path, a new fire truck purchased, repairs done to the community center heating and curling rink piping, the first steps completed in repairing the aquatic center by replacing and upgrading its pumps and electrical systems, ensuring a low cost and steady supply of winter sand, an option to undergo crack filling on the middle bench, ultrasonic underground leak detection and pavement integrity check as steps towards replacing our damaged roads, cemetery upgrades, irrigation upgrades and new sand for sandtraps for the golf course and other capital upgrades.”
That’s a fairly big order, and not everyone is convinced that the town can hit their target. Indeed, last year, the town failed to spend about $5-million of its budget.
Of course, says Wall, $1.2 of that money was earmarked towards the new fire engine, which should be delivered sometime in the next few months. And $2-million was set aside for Council initiatives, which means it wasn’t earmarked for anything. “Most of the money is just in those two projects there,” he says.
Still, that has got a number of residents in town upset. Former Councillor Tim Snyder says those items were already on the budget last year.
“In actuality, should we not have taken the amount of money from last year’s budget that went back into surplus, the projects that didn’t get done, out of this year’s, so taxes isn’t paid on that amount again?
If we have a $15-million budget in projects, and we only got $10-million of that budget done, $5-million of that goes back into surplus and goes back into the budget. Then we bring those projects forward for next year and bring the budget back up to $16-million, we’re paying taxes on that again. I just don’t understand.”
Wall says he can’t speak to what happened in years previous, but the intent for this year is to spend the money.
Work to be done
Along with the capital upgrades, says Wall, staff is working towards a number of other important goals. “In 2016 the District will move towards offering rural residential lots, the option for residents to expand their property where possible, introducing for the first time an exempt staff review policy, a new Tumbler Ridge centric purchasing policy, a new animal control by-law with the option for residents to own chickens, an Off Road Vehicle (ORV) by-law introduced and updated, a new brand for Tumbler Ridge with complete community by-in, a once in a generation opportunity, launched, a new municipal website with a streamlined land purchasing system, opening the community center on select stat-holidays, preparing a ‘fun in the sun’ program, adding weeks to ice time availability and implementing a calendar year budgeting operation.”
These are all things that Council has told staff they want to see.
Council had asked if staff could cut from the operational budget. These are the core services that the town offers: protective services like fire, public works, which includes all the infrastructure in the town, and the Community Centre.
The initial core budget for 2016 is actually slightly higher than in 2015, at $9,196,592. “This represents a 1.5 percent increase over 2015 levels,” Wall says. “However, to see the changes staff has made requires further inspection of this number.”
In 2016, he says, Council has increased the amount being given back to various groups in Fee for Service and Grant in Aid agreements to about $1-million, or about ten percent of the total budget. Additionally, a mandated union wage increase of two percent and an increase in the Golf Course line due to the new operating agreement have bumped this amount up.
But, he says, staff has actually reduced the core budget, from 2015 levels, by over four percent. “This was an incredibly difficult task considering other upward pressures on the budget for 2016 such as the addition of a Corporate Officer, Chief Financial Officer, and Economic Development Assistant to our costs as well as the full time maintenance of the new Visitor Information Center which includes janitorial services, maintenance, heating, and other utility charges. This reduction is significant, especially given our other upward pressures, and was done through finding operating efficiencies and also making some tough choices.”
To reduce the budget four percent, he says, it required cutting services. The District would have to decrease the frequency we cut District grass, decrease litter pick up, decrease maintenance on some fields, decrease horticulture, decreased advertising, repair only hazardous sidewalks, and decrease the number of summer students hired this year.
This, says Wall, is too much of an impact on the services being offered. “This would represent a dramatic decrease in the operating budget and a fundamental change in the government of the District of Tumbler Ridge. This option would greatly increase the likelihood of a budget amendment at the end of the year. It would also likely result in emergency Council meetings to approve un-anticipated spending throughout the year. This would include meetings for funds to replace machinery that breaks down, staff would need emergency Council meetings to pursue grant related projects, damage to buildings that occur, and projects which have a larger scope than originally anticipated. This level would result in an extremely rigid administration that would not have the resources to adapt to a dynamic and changing municipal environment.”
Rather than cutting the core budget quite so steeply, he proposed two alternatives: cutting the core by 2.5 percent, which would still see reductions in services, or cutting by 1.5 percent. This latter is the option that staff recommends. “This would result in a responsible decrease in the operating budget while a core services review is undertaken,” says Wall. “It would result in a low likelihood of a budget amendment and emergency council meetings. This would also give administration flexibility to capitalize on opportunities that present themselves throughout the year. This option would result in no decrease to offered services and allow us to hire the same compliment of summer students as in years past. This is the course recommended for communities undergoing core service reviews and is recommended by staff.”
Wall says it can often be helpful to compare what we are doing locally to other communities in the region. In 2016, he says, Council’s total cash outlay, including staff recommendations, will be similar to 2015 at approximately $17,000,000. “We can compare this with Chetwynd’s 2015 budget of approximately $19,000,000. In 2015 Chetwynd undertook $19,000,000 in projects that required them to borrow $2,500,000 and transfer $4,250,000 from reserves.”
In contrast, he says, a $17,000,000 budget for Tumbler Ridge would require no money borrowed and under $1,000,000 transferred from reserves, which is the same as in 2015. “Tumbler Ridge is one of very few municipalities in North America able to undertake such a large step forward in its asset replacement and management without needing to transfer significant money from their reserves or borrowing.”
Or, he says, compare revenues to Dawson Creek. In 2015 Dawson Creek spent $4,400,000 on debt payments. In 2016 Tumbler Ridge is estimated to collect $450,000 in investment revenue.
Long term fiscal health
There is growing concern, says Wall, that the District’s spending would not be sustainable without the tax revenue generated from the mines which are in care and maintenance.
He points out that Walter Energy has filed for bankruptcy, and will probably be removed from the District’s tax role in the future.
“The District collects approximately $3,750,000 a year in taxes from the mines. Should every mine completely shut down, a scenario that is not likely, we estimate that the District would be able to collect $12,250,000 in other revenues,” he says. “This would allow the District to operate, without any changes to the budget, with a yearly $2,750,000 capital and special projects spend without having to draw from reserves.”