A staff report in North Cowichan has projected a property tax increase of 9.26 per cent in 2023.
But it’s very early in the municipality’s budget-building process for next year and it’s expected the tax increase will be significantly lower than that when it’s finally adopted.
After a lengthy discussion at its meeting on June 15, council instructed staff to do all it can to leverage grant opportunities and budget reallocations, and review departmental budgets to identify possible cost savings and best value for money to lessen the projected tax increase.
Staff was also instructed to consider revenue-generation options and to limit capital expenditures.
Coun. Tek Manhas said any tax increase has to be affordable for the public, and an increase of 9.26 per cent is not affordable.
He criticized senior levels of government for continuously downloading financial responsibilities to the municipality, including funding the region’s sharps-collection program.
“One way to reduce taxes is to use the $600,000 the (Climate Action and Energy Plan program) has in its reserves for the budget because we don’t know where to spend that right now,” Manhas said.
“I’d like to see a tax increase of no more than three per cent in 2023.”
The municipality had kept its tax increase relatively low in 2022, at 2.89 per cent, during the ongoing COVID-19 pandemic to help property owners who are facing financial difficulties, but the current preliminary budget for 2023 includes the reinstatement of items that were eliminated to lower the tax increase.
They include taxation from the RCMP contract going from 90 per cent to 95 per cent, reserve contributions to agricultural and insurance reserves being reinstated, as well as the parks capital contribution, which was postponed in 2022.
Those alone amount to more than $500,000 in budget expenses in 2023, if council allows it.
“In addition to these one-time items, the 2023 budget includes debt servicing for approximately half of the cost of the new RCMP building and the Crofton Fire Hall,” Talitha Soldera, North Cowichan director of financial services, said.
“It also includes taxation to offset some forestry operations as the (forest) reserve fund is anticipated to be fully depleted.”
As well, Soldera said the 2023 budget takes into account the negotiated two per cent increase in staff wages, inflation, and an increase in the contribution to capital expenditures approved during the 2022 budgeting process.
After council members raised concerns about the possibility of a 9.26 per cent increase, CAO Ted Swabey said the idea of council providing staff direction for lowering the projected tax increase is exactly the point of budget discussions at the council table.
“If council wants a three per cent tax increase in 2023, you could pass that motion and (staff) would work towards what a three per cent budget would look like for council,” he said.
While this council will begin the budget-building process for next year, the final budget for 2023 will be passed by a new council after the municipal election in October.
Swabey said an election year is the most troubling time for building a budget because it’s not known what the priorities of the new council will be, but there’s no way around it.
“Approving the largest budget of their lives in the first two months after they’re elected is the most difficult job of a new council,” he said.
“It’s a very complicated budget and there’s a lot of assumptions about how you can make a budget go from (9.26 per cent) to zero or three per cent that needs fleshing out. We always take the position that it’s very difficult to make big reductions, but we do find ways to reduce the budget and (new) revenue has helped in the past.”
But Swabey predicted the municipality won’t get to a three per cent tax increase in 2023 without service cuts.
“That’s OK if that’s the direction that this council, or the future council, want to go in,” he said.
“Our job is to provide you with the numbers you are desiring, so the earlier staff can work on it, the better.”