Budget: No change to tax rates for 2017

Trent Ernst, Editor

While the usual caveats about “it’s not over until the bylaw is passed,” which won’t happen until the final tax roll arrives sometime in April, Council has decided to hold taxes at the same rate as last year, which makes three years in a row that Council has not increased residential taxes.

The previous year, Council reduced residential taxes by five percent.

This is despite a major blow to the tax base of the town, as Peace River Coal has filed for, and been granted, Closure Allowance.

Closure Allowance, according to the BC Government, is an “assessment relief for individual industrial and EPG improvements or entire plants and facilities when they have been closed or shut down. Closure allowance reduces the improvement value to ten percent of the cost.”

This means that, while Peace River Coal is still paying taxes, it is only paying ten percent of what it paid last year, a decrease of somewhere around $1.9-million.

In order to qualify for Closure Allowance, the plant or facility must be closed a minimum of three consecutive years immediately preceding October 31, or confirm in writing that the facility is closed permanently, if that three years has not yet past.

As Peace River Coal had not been closed three years as of October 31, they chose to take the latter route.

“The intention of B.C. Reg. 53/2016 was to invest the owner of a closed plant with the ability to declare that the closure of their plant was permanent and thereby to qualify for a closure allowance,” says Geoff Radtke, Deputy Assessor with BC Assessment. “The reference to ‘permanent’ in the Regulation does not imply that the closure is ‘forever.’ The regulation contemplates that plants may reopen, and if so, closure allowance is removed. The Trend Mine has been shut down since December 2014. The regulation contemplates that closure allowance will be available to owners who do not foresee reopening—if they are able to certify that, that is the case—before closure is ‘deemed; after three years.”

Mayor McPherson says this definition of permanent is different than his. “Permanently apparently does not mean permanently,” he says.

Two years ago, he says, BC Assessment came to Council and told them that the mines would not be able to change their tax rates without permanent closure. At the time, he says, they were led to believe that this meant that they would have to turn in their mining permits, but this doesn’t appear to be the case. ”

While the town will be challenging the ruling, he isn’t hopeful.

Without a final tax roll from BC Assessment, the District is not yet able to determine its mill rates. Instead, Council voted to not collect any more residential taxes for 2017 than they did in 2016.

“Because it is impossible to set tax rates at this point,” writes CAO Jordan Wall in his report, “Council will be asked to set an amount they wish to collect from each category.

That amount will be translated into tax rates which staff will bring back to Council when the final roll has been set.”

This means that residents may see some shifting of their taxes, as their actual property value assessment may have shifted proportionally. However, the total collected by the District for 2017 will be the same as in 2015.

This means the District is planning on collecting a total of $1,136,200 from its residential tax base, same as last year, or nearly the same.

This may seem confusing, as there are a number of figures used to assess property value. The most commonly used figure is mill rate, which is how much tax is paid per thousand dollars of assessed value.

It is also irrelevant in this calculation. The average value for a property increased 5.48 percent in Tumbler Ridge, while the average house paid $508 in property taxes last year. That means that this year, the owner of the average property would still pay $508.

When the mill rate is assigned, the actual mill rate will have dropped, but the actual dollar amount paid remains the same.

Since the average property value increased in Tumbler Ridge, most people would be paying more if the mill rates were to stay the same for 2017.

If your assessed property value increased by more than the average of 5.48 percent, you will be paying more this year than last year. If your assessed property value increased by less than the average, you will be paying less. But the overall amount collected, as well as the average amount collected per household, will stay the same.

Council also voted to not increase taxes for any of its other tax categories. This means that they will be collecting $1,437,973 from Light Industry, $505,936 from Businesses, and $53 from Farm lands.

However, with the loss of 90 percent of the tax revenue from Peace River Coal, the District will only be collecting $3,827,304 from major industry, which includes not just Conuma Coal and Teck, but all major industry, including most of the oil and gas development that has happened within the District. This is down about $2.3 million from last year.

Despite the loss, the District will still be collecting around $9.6-million in taxes.

Some people on Council, including the mayor, were in favour of raising taxes, at least to keep up with the cost of living increases. “We need to look at the future, so we need to look at increases. You can only decrease for so long before you have to pay the piper,” he said at the Budget Meeting. “I’m not saying we try and make up our losses, but sooner or later, we have to look at those as places to make up those taxes. I’d like to see us take that into consideration. Taxes pay for services. It costs us more every year to provide those services. Having those tax rates drop doesn’t make a lot of sense.”

However, that proposal met with strong opposition from much of Council, including Councillor Scott, who said that small businesses and many residents are not seeing any benefits from the mine. “There are a lot of houses sitting there. With prices being so low, it’s hard to get mortgages. We have a part time bank. We don’t have the amenities. I wouldn’t be in favour of increasing taxes on small businesses and residents.”

In the end, Council voted not to raise or lower taxes. This means that they will be collecting enough to cover the $9,257,734 core budget.

However, Council is also looking at spending $9,766,071 in capital and special projects, including $4-million in paving. About $1.7-million of that has been rolled over from 2016, but that amounts to $17,328,719 in new spending for 2017.

The District has a healthy reserve fund—over $23-million—set aside for situations like this. “It is not untypical for a community to go into debt to finance the level of capital expenditure as needed in Tumbler Ridge,” says Wall in his report. However, Tumbler Ridge has substantial reserves and will not need to borrow any money to complete this work.”