City staff is recommending council increase residential property taxes for the next three years.
The city estimates it will need to increase taxation in order to balance the budget in 2012, 2013 and 2014.
Previous councils have relied on the city’s reserves, or savings accounts, to make up budget shortfalls but city staff warn that will cause serious financial headaches down the road.
“Funding ongoing operations or multi-year projects through reserves or reducing expenditures or delaying them for one or more years will continue the financial instability as these funds are one time money and will need to be replaced in the next financial plan by either an increase in taxes or by using more reserve funds,” said Laura Ciarniello, the city’s manager of corporate services. “In essence using this approach is masking the problem. This kind of cycle is not sustainable.”
Instead, Ciarniello recommends a 15.27 per cent ($181.80 for the average home) increase in residential taxes for 2012; an 11 per cent ($98.78) increase in 2013; and a four per cent ($47.62) tax hike for 2014.
The city is also considering an increase in user fees for water, sewage, and recycling by 6.92 per cent this year; 9.71 per cent in 2013 and 3.79 per cent in 2014.
“Throughout the budget process, staff has advised council that it would recommend having the largest tax increase in the first year,” Ciarniello said. “The resolutions that were made…with regards to the parcel taxes and user fees has resulted in the middle year being most heavily affected. Council has the options to re-evaluate their motions to adjust the increases to have the largest increase in the first year.”
Those options include expediting the water fee increase which is supposed to rise in small increments over the next year and delaying the garbage user fee decrease which came out of council’s financial meeting last month. Ciarniello said in both the 2013 and 2014 budgets, council will have to figure in an addition of three per cent, or $800,000, for inflation and wage increases.
City staff also forecast the current rate of growth will continue and both budgets will have $200,000 generated from construction taxation.
