In addition to this year’s 4.85 residential property tax increase, parking meter rates in Nelson will go up from $1 to $1.25 per hour.
The city’s chief financial officer Colin McClure presented his draft budget to about 40 members of the public on Monday. A copy of his slide presentation is attached below.
He said the tax increase is due largely to the provincial government’s requirement that the city hire an additional police officer and police administrative person, at a cost of $195,000.
The increase also results from the lack of the city’s usual increase in the annual dividend from Nelson Hydro, because of the expenses related to last year’s wind storm. Also building permit revenue is expected to drop, he said.
McClure’s rule of thumb is that a one per cent tax increase raises $80,000 for the city. The 4.85 increase is intended to cover a revenue shortfall this year of $388,000.
McClure explained that the residential tax increase will cost the owner of a $330,000 home an additional $69 per year.
The city’s tax revenue is derived 25 per cent from businesses and 75 per cent from residents.
The point of the parking meter increase, he said, is to fund paving, which is routinely paid for by parking fees rather than taxes. He said the city has been underfunding paving for several years and now needs to make up a $600,000 shortfall. The parking meter increase is expected to bring in an additional $75,000.
Of the city’s $42-million budget, $17.7 million is for the city’s operating fund and that’s where residents’ tax money goes: fire, police, garbage, cemetery, parks, transit, library, roads, salaries and benefits, and so on.
The other portion of the $42 million goes to utility operations. Those utilities — water, sewer, and hydro — aren’t part of the operations fund or property taxation because they are self-funded through user fees. They are all proposed to go up this year by 2 per cent, 1.5 per cent and 2.96 per cent respectively.
Some operations money goes into statutory reserves that the city maintains for such things as equipment, buildings, the airport, and downtown and waterfront upgrades.
As in most years, tax revenue will only pay for a portion — in the proposed 2017, about 50 per cent— of the city’s operations expenses and the city must make up the rest from other sources including grants from other levels of government, transit, parking tickets, and garbage revenue.
If Nelson residents’ tax bills don’t seem to match the information given here, that’s because the city also collects taxes on behalf of other agencies, so city taxes account for only 38 per cent of residential tax bills, while the rest consists of taxes collected for the Regional District of Central Kootenay (19 per cent), school taxes (39 per cent), regional hospital taxes (three per cent), and the BC Assessment Authority (one per cent).
McClure also discussed many details related to utilities, reserves, and debt. His presentation is attached to the online version of this story at nelsonstar.com.
At the budget open house, there were some sceptics in the room. Two people questioned the use of a dividend from Nelson Hydro to fund municipal operations, saying the dividend should go directly to citizens. There was also some debate about how Nelson’s hydro rates compare with BC Hydro’s.
McClure stated that Nelson Hydro replaces the tax base provided to most cities by large industries, and that without the Nelson Hydro dividend taxes would have to go up in Nelson by 34 per cent.
Others said perhaps Nelson is embarking on too many expensive projects. The only example they gave was the renovation of Hall St. City manager Kevin Cormack replied that the original impetus for that project was that the sewer and water infrastructure was aging and needed to be replaced, and that the above-ground changes to the street were an add-on to the utilities upgrade, and were funded largely by grants from other levels of government.
