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Prince George city council to debate lowering tax increase by less than one or two per cent

Recommendations come from the Finance and Audit committee meeting
Prince George City Coun. Garth Frizzell chairs the Finance and Audit Committee. The April 20 meeting was livestreamed on the city's webstie. (via Hanna Petersen)

Prince George's standing committee on finance and audit has come up with a few ways the city can respond financially to the COVID-19 pandemic.

Staff have been crunching numbers and has come up with several cost-saving scenarios that involve deferring capital projects, cutting raises and new hires and moving money around in general.

The city is taking a big revenue hit and losing about $1.3 million a month, with the biggest revenue impacts being the closure of all civic facilities and the loss of gaming revenue from the Treasure Cove Casino.

However, committee chair Coun. Garth Frizzell said Prince George is in a strong position to weather this storm. 

“We will continue to deliver all of the essential services you need daily. We will continue to exercise prudent responsible decision making and we will continue our rigorous financial scrutiny.”

The committee, met today (April 20) via public livestream and approved four recommendations to bring forward to council.

Tax decrease options

One of those recommendations will see city staff put together a budget that will present two options for the 2020 tax levy. 

By paying off two short-term loans for the Willow Cale Bridge and the Winnipeg Street sinkhole using reserve funds, the city is able to lower that levy.

After much discussion, the finance and audit committee agreed to present a plan that could see the tax levy decrease from 3.44 per cent to less than two per cent, or a second option of less than one per cent, at council’s regular council meeting on May 11.

A two per cent tax increase amounts to about $50 per household.

The financial plan bylaw and the annual property tax bylaw must be passed before May 15 of each year.

That’s because the city also collects taxes on behalf of other organizations: University Hospital, School District, Regional District (including the 9-1-1 funding), Municipal Finance Authority and BC Assessment.

The deadline for paying these other organizations is also regulated by the province and funds are due on July 31, whether the city has collected the taxes or not.

The exception to this is the School Tax as the province made an announcement on April 16 that its deadline is going to be Dec. 31 of this year.

The budgeted 2020 tax collection for School Tax is $28.9 million; the remaining organizations’ taxes total $15.9 million, also due in July.

During the meeting, Councillors Terri McConnachie, Kyle Sampson and Brian Skakun voiced a desire to see options for a zero per cent tax increase.

“I think the measures that are in this report barely scratch the surface of how we have to react,” says Coun. McConnachie.

“I think we will be in the best position if we do all we can now to challenge ourselves to find the greatest amount of savings and if the easiest ways to see that and measure it is in terms of a zero percent increase then so be it.”

Coun. Skakun said a zero per cent tax increase would show the taxpayers some empathy, asking the committee “what are we doing to show we care and to drive down some of our costs.”

However, Coun. Ramsay questioned whether a zero per cent tax increase would just mean a very high tax increase in the following year.

“I want to see how we are going to be ready for recovery and I don’t see how we are going to be ready for recovery at zero,” added Coun. Murry Krause.

“I was on council a year when we did a zero-based increase because we thought we were doing the right thing and it took years for the city to recover and get back to a place where they were meeting the needs of the community.”

The committee eventually settled on the recommendation to bring forward the two options to council, who would then be able to accept or amend the recommendations.

“I just want to be clear to the folks watching at home today isn’t the final part of the process it’s just the beginning,” said Skakun at the beginning of the meeting, which was live-streamed on the city’s website.

Capital projects deferred

City staff were also able to save nearly $25 million by deferring certain capital projects, saying some that have progressed past a reasonable point or that are required for safety will be continuing, but non-critical projects are being proposed for deferral to future years to free up funding.

This will help the city meet cash flow requirements.

Staff have selected 16 general projects for a total of $18.34 million, including two water projects for a total of $1.64 million and three sewer projects at $4.85 million.

Deferring $24.8 million in projects will leave the 2020 capital plan with a total value of $98.2 million.

Capital projects are funded entirely by the City’s reserves or MFA debt.

The recommendation to approve these deferrals will also be brought forward for council’s approval.

City council to give-up raises

The finance and audit committee will also bring forward a recommendation that city council end it’s annual remuneration increase on May 1.

City council received a wage increase on Jan. 1, but the recommendation would see that increase be discontinued on May 1 resulting in at least a year-and-a-half with zero remuneration increases for council.  

The recommendation would result in less than $10,000 worth of savings.

Utility penalties

Finance and audit also recommended that council direct administration to eliminate the 10 per cent penalty on late sewer, water and solid waste utility payments from July 1 to Dec. 31. 

The committee also approved a motion to explore the revenue and expense impacts of keeping the Four Seasons Leisure Pool closed for the remainder of 2020.

What's next? 

The next city council meeting is scheduled for next Monday, April 27.

The recommendations discussed at today’s finance and audit committee meeting will come to council for its May 11 meeting, but the committee also discussed the possibility of holding a special council meeting in the interim if-need-be to further discuss the recommendations before a final decision is made.