As seems par for the budget course, the crunch is on both in terms of the timeframe remaining, and what to do to balance the books.
At the meeting on Sunday, from which Mayor Darwin Wren was absent, council was informed the town’s financial budget is unbalanced with about $923,237 left in excess. (The amount was $867,737, however there was $55,500 increase added to fund the start-up of the new Chamber of Commerce.)
Part of the increase to costs is a $500,000 or 6.7 percent increase to operating costs. Chief Financial Officer Candie Laporte said, “Council could say, ‘we don’t want it to jump that high. CPI is 2.4 percent and we could work with 2.4.’ There is no reason we can’t pull from more surplus to cover the capital.”
Laporte has suggested a few options of how to balance the budget by the May 15, 2013 deadline. The outcome will probably be a combination of the suggestions. These options include: cutting a few of the capital projects, cutting some of the operations budget or, adjusting taxes. Residential taxes have remained at a zero percent increase. Small business taxes have actually decreased to a 3.1472 ratio to residential taxes in an ongoing attempt to lower business taxes to encourage business prospects to Tumbler Ridge.
Laporte said, “Business taxes have actually dropped to 3.1472 of residential each year. I don’t know the provincial average; but I know the Canadian Federation of Independent Business would like to see it at two. Meaning business pays twice what residential does.”
The Financial plan has $14,205,278 slated for revenue with $10,390,091 of this budgeted in tax revenue.
Laporte recommended a 2.4 percent increase to the class 2-tax group, which includes wind farms, farming, recreation and major industry, to name a few of the groups that could be affected. This increase would be in line with the CPI.
An important factor to note is there is a surplus of 5.7 million. Due to lack of completion of capital projects last year, there was 2.5 million dollars added to this year’s budget. So far for this budget there has been 1.6 million dollars used from this supply, leaving $900,000 left over from last year’s addition to the pot, which would almost balance the budget. Laporte said, “With us using 1.6 million in surplus, you could definitely decide to do that. Again I would suggest against that to cover operating. Although it is sustainable for a few years, it isn’t sustainable in the long-term.” Council and department heads left the meeting on Sunday with the job of going through the capital projects and determining which of these can be put on the back burner.
Councillor Caisley said, “The next step for council then would be to revisit the capital projects and see what we could eliminate from there. Including the major items on the operational side and once we are satisfied that we have done as best we can on that, take a look again at what the balance would be in terms of a tax increase and the breakdown, and then deal with the surplus.”
A main concern of council is including projects to the capital budget and them not getting completed.
“Anything shy of resources from an operational perspective will have a direct variant on the capital projects that we decide to keep in,” said Councillor Caisley.
Barry Elliott, CAO, said, “The capital components have written within the amounts, the necessary resources to carry them out. We’re not relying on the operating staff necessarily to go over and work in capital. We have very deliberately tried to separate the two.”
Laporte explained in most municipalities, only about 70 to 80 percent of planned capital projects actually come to fruition during that calendar year. “There are so many contingencies on projects. It’s just the nature of it; we do the best we can to get everything done,” she advised.
Councillor Mackay responded, “We have a wish list here of projects, maybe the department heads should take another look at what is realistic and what is not. We should be looking at what we can 100 percent accomplish by the end of the year.”
Even with a 6.7 percent increase to operation costs, department heads and Elliott are sure there is no more fat to trim in this area of the budget. “The most important piece to the budget is the operating budget. That’s the one we use on a day to day basis to keep the legs on those services the public and council demands. In doing the operational budget, there were sit downs with department heads and there were a lot of tough decisions made. I think we’ve trimmed that as much as we dare without losing services or impacting in a large way any of the services we have,” says Elliott.
Councillor Mackay and all of the councillors seem to be on board that the key to balancing this budget is to go back and only include projects in the capital budget that can with most certainty be accomplished. Councillor Mackay said, “Whenever we are talking about a capital project we are talking about adjusting taxation. If we are going to adjust taxation for something that never comes about, that’s a disservice in my opinion. I think we have to figure out exactly what we are going to do and raising taxes would be a last resort.”
In the same vein, Councillor Tim Snyder said, “I don’t want to see any money going back into surplus. That is why we have to make sure we can do the capital projects. Every year we do that, we say we are going to do stuff and we don’t, isn’t doing any good. As far as I am concerned the public will be losing complete confidence in the people running the town.”
Though there could be many ways to balance the books, there is limited amount of time left, as Elliott said, “We are definitely under the gun.”