The city's non-profit groups will have to cough up a little more money next year after a decision to cut back on property tax exemptions.
Monday night's city council meeting featured a long debate on the proposal to trim the rate of permissive tax exemptions from 100 per cent down to 97 per cent for 2013.
Typically, the city exempts the full amount of property tax for places of worship, non-profit organizations, private schools or other eligible tenants who apply. But in doing so this year would commit the city to breaking their policy of only allocating 1.5 per cent of the municipal tax levy to fund these exemptions.
The more than $1.2 million - based on 2012 tax rates and assessment values - worth of estimated exemptions would bring that percentage to 1.54 per cent of the annual tax levy.
In order to keep the exemptions within the city's policy, council's finance and audit committee decided a three per cent cut across the board would be more equitable than approving some tax exemption applications over others, said committee chair Cameron Stolz.
"This will be reviewed again in the new year in light of the core review and what we will end up with," Stolz said. "I would suggest that there will be a different approach for next year, but at this time there was not the time to implement it and have it back to council in time."
Council needs to have its tax exemption bylaws in place by Oct. 31 or else, according to the Community Charter, it will not be in effect for the upcoming year.
There is only one more council meeting before the end of the month in which to give the bylaws final approval.
Coun. Dave Wilbur said he was uncomfortable with the idea of making a sudden change.
"This approach troubles me somewhat in that we have spoken often of the dilemma of not for profits and how most of them don't have multiple-year operation funding and have to spend a lot of their time chasing their funding during the year and not getting on with the business as in their vision and mission statement," he said.
Wilbur suggested the proposal go back to staff for more options, perhaps to find a way to stagger the change in exemptions to give organizations time to plan accordingly and adjust their budgets.
There was nearly an hour of discussion and suggestions of ways in which to find a solution everyone could agree on without having to call a special meeting so the bylaw could be approved by the province's deadline.
"Considering the timelines we have, we're a bit challenged," said Coun. Murry Krause. "It's certainly not easy for me to support something like this but this council created a ceiling which we're trying to adhere to on a tight timeline."
Outgoing city manager Derek Bates - at his last council meeting - uncovered an option the majority of council was content with: council could approve the 97 per cent tax exemption, but leave the door open for discussions to provide a one-time operating grant in the 2013 budget to reimburse the organizations for the remaining three per cent.
Mayor Shari Green said she was challenged with the idea of the loophole that would allow council to break their policy of a 1.5 per cent tax levy cap.
"We're trying to follow some policies that we've set in place for a reason and we know that we have some comparables that tell us we're on the high side and yet we're trying to find a way to still meet this number," Green said.
According to a report from financial planning manager Kris Dalio, Prince George, at 1.5 per cent, out-exempts cities such as Kamloops (0.89 per cent), Kelowna (0.99 per cent) and the District of North Vancouver (0.52 per cent).
The motion to look at providing grants in next year's budget passed without support from Green or Stolz.
For organizations that are affected, the three per cent in property tax they have to pay is not a large portion of their yearly budget, but still has an effect.
"It's better to have some sort of exemption than no exemption at all," said Wayne Hughes, executive director of the Northern John Howard Society, adding that although he knows times are lean, he would prefer if the exemption rate stayed the same.
"With any reduction, the money has to be taken from some other program somewhere and so if they decide they want to save money on the backs of non profits, some services somewhere are going to have to suffer," he said. "It kind of defeats the purpose of giving us a subsidy and us having to find ways of making up the difference."
Kathy Nadalin, president of the Elder Citizens' Recreation Association, said she would like to see the city cut their spending somewhere else but understands the city is "between a rock and a hard spot" when it comes to balancing the books.
"I realize that they have to do something. We tell them cut taxes; we tell them, 'but don't cut with me,'" she said.
The seniors' centre fundraises for all of their expenses outside of what they receive from provincial gaming grants and membership dues. The extra $500 they would pay in property tax is manageable, Nadalin said, but still more money they have to raise.
"I'd like to see them take it from someplace else, but I don't know where. But that's what the core review is about. Not everybody is a winner, but hopefully not everybody is a loser," she said.
