North Cowichan is in a difficult financial situation as it prepares its budget for 2025 over the next few months, according to CAO Ted Swabey.
Swabey pointed out to council at its meeting on Jan. 15 that an 8.4 per cent tax increase for the year would only maintain current service levels in the municipality, and does not ensure the sustainability of North Cowichan’s operations and services into the future.
He said North Cowichan manages more than $2 billion in aging assets and infrastructure that have significant backlogs in maintenance and repairs, as well as approximately 1,000 pending implementation issues from the many plans that the municipality has adopted that require attention.
“The organization also continues to face staffing shortages in key areas that are essential to the delivery of support services, which compounds the challenges of meeting expectations,” Swabey said. “This year, I must acknowledge that the situation is not just difficult; it’s dire. In fact, many of us on staff feel that this is a pivotal year, one where we need to seriously reassess our service priorities and start planning a recovery strategy for the next five years.”
Swabey said the proposed status-quo tax increase of 8.4 per cent in 2025 covers a wide variety of financial pressures that are out of North Cowichan’s ability to change.
“I feel for council because this year has these cost levers that we are not in control of, which include a two per cent increase for our 911 services, a 2.14 per cent increase in RCMP costs and then an additional 4.26 per cent to account for inflationary pressures and increases in operational costs, including library costs,” he said.
“So, we’re getting hit from all areas in terms of this year’s budget, and that’s really unfortunate.”
Swabey said if North Cowichan were to lower the proposed tax increase to below 8.4 per cent, it’s his belief that the municipality must be prepared to consider reductions or elimination of some of its services.
He said that historically, North Cowichan has managed to keep tax increases equal or lower to other jurisdictions and that has had short-term benefits for the community, including in 2020 during the pandemic when the municipality kept the tax increase at just 1.4 per cent.
“However, this approach has left us with a growing backlog of asset management needs and significant long-term financial challenges,” Swabey said. “It is my opinion that if we don’t start to address these issues now, they will only become more costly in the future for our citizens. It is essential to understand that we are at a critical crossroads. We need a sustained effort over the next five to 10 years to address the critical needs of our organization.”
Swabey said that the cost of implementing all of the requests for enhancements from the various departments in North Cowichan in the draft budget for 2025 equates to an approximately 10 per cent tax increase in addition to the 8.4 per cent increase to maintain a status-quo budget.
“So, in terns of where we go from here, that’s up to the direction we receive from council.” he said. “I remind you again that anything below an 8.4 per cent increase is going to, in my opinion, mean cuts. I think between a 15 to 20 per cent increase is the number that we should be looking at this year.”
The tax increase in 2024 was 5.18 per cent.
