North Cowichan is now forecasting a possible tax increase of 2.31 per cent in 2021, far lower than the more than seven per cent increase that was considered possible in June.
That’s because of the $4.4 million the municipality learned in November it was to receive from the province to help offset costs related to the ongoing pandemic through the COVID-19 Safe Restart Program for local governments.
RELATED STORY: NORTH COWICHAN TO RECEIVE $4.4 MILLION FROM PROVINCE FOR PANDEMIC RELIEF
“That changes everything,” the municipality’s finance director Mark Frame told council before Christmas.
“Much of this funding can be used to reduce tax increases where possible.”
In April, North Cowichan significantly reduced its planned tax increase in 2020 at almost the last minute due to the COVID-19 pandemic in an effort to reduce the tax burden on residents during the uncertain financial times.
At the time, Frame said the municipality’s budget for 2020, which ended up seeing council implement a 1.4 per cent tax increase instead of the 4.4 per cent that was originally recommended, was fiscally restrained as it tried to deal with the financial constraints related to the pandemic and there could be further impacts on service levels if North Cowichan continues this course in 2021 and beyond.
He said if council chose the option of a one-time big tax hike of 7.2 per cent in 2021 to make up the difference for such a small increase in 2020, the tax rates over the next few years would be close to the projections in the original five year financial plan.
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At last week’s council meeting, council members also voted to approve a number of new positions in the 2021 budget, some of which were recommended for 2020 but not approved after the municipality decided to severely cut its proposed tax increase for the year.
The positions include a new assistant fire chief who would help deal with the growing number of required fire inspections in the municipality, at an annual cost of $94,000 plus benefits; a new planning manager who would help the planning department to better deliver community planning services, which would cost approximately $112,000 per year, excluding benefits; and an environmental engineering technician who would help with the growing environmental initiatives in the municipality, at a cost of approximately $71,000 per year plus benefits.
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The costs of the new positions would be covered under the proposed 2.31 per cent tax increase in 2021.
But a lot of additional work and consultations still have to be done over the next few months as North Cowichan prepares to meet its deadline to have the budget prepared for its first three readings, which are usually in April, so nothing is set in stone at this early stage of the budget process.
Provincial rules require that municipalities set their final annual budgets by May 1 each year.
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