Next month, city council will meet to start nailing down the budget and decide the property tax rate for 2021.
The city’s finance and audit committee is recommending city council approve a two per cent tax increase but what’s that recommendation really worth? Isn’t this the same finance and audit committee that seems to have snoozed its way through huge cost overruns on numerous city capital projects over the past few years?
Cheap (but fair) shots aside, the recommendation doesn’t make sense.
The City of Prince George received $6.1 million from the provincial government’s Safe Restart Grant program, so there’s more than enough to cover the $3.6 million needed to get down to no tax increase in 2021 and have $2.5 million to spare for next year.
But wait.
Now the finance and audit committee is endorsing careful spending.
"My personal opinion is we're going to face revenue shortfalls through 2021, running into 2022," Mayor Lyn Hall said. "To me, it's about being conservative about that $6.1 million."
"I don't want the taxpayers to be hit with a five per cent tax increase in 2022," Coun. Cori Ramsay said.
“We don't need to spent the kitty – there may be rainier days ahead," finance and audit chair Coun. Garth Frizzell added.
With that approach, Hall, Ramsay and Frizzell only want to use $1.3 million of the provincial money for 2021 and set aside the remaining $4.8 million for future use.
There are both political and financial reasons why that recommendation should be rejected in January, in favour of no increase in 2021 property taxes.
On the political side, the move can be seen as shamelessly self-serving. Setting aside most of the provincial money to 2022 just happens to coincide with municipal elections, so the optics of deferring spending to an election year, instead of giving taxpayers a break in the here and now, stink.
It doesn’t matter if council members interpret that potential criticism as an assault on their integrity. It doesn’t matter if reality contradicts the perception. The perception will still remain that mayor and council might be holding onto that cash to help fuel possible re-election bids in the fall of 2022.
Even if that suspicion of political skullduggery wasn’t there, there are perfectly legitimate financial reasons to go with no tax increase in 2021.
For starters, there will still be $2.5 million of the provincial money left over. Now combine that with the additional savings the city is expecting in 2021, according to finance director Kris Dalio.
He expects labour costs next year to be $1.9 million less.
The city saved $3.15 million in 2020 from having the Civic Centre, the Elksentre and Four Seasons Pool closed for most of the year. Similar savings could be seen in 2021 by committing to keeping Four Seasons permanently closed while only opening the Civic Centre and the Elksentre in September, coinciding with the full distribution of COVID-19 vaccines through the general population.
Furthermore, development revenue was surprisingly strong this past year and demand remains strong for 2021.
With these savings and revenue streams, along with the leftover provincial money and additional operational savings found by senior management in 2021, city council should be planning for a “have our cake and eat it, too” scenario – no property tax increases in 2021 or 2022.
That’s the kind of “we’re all in this together” relief local taxpayers deserve.
Hard work, discipline and the willingness to make tough choices from mayor and council, through to senior management, can make it happen.
