Initial budget proposals indicate residents and businesses could face a one per cent increase in their municipal tax rate this year. That’s on top of an estimated 1.8 per cent increase in assessment (property) values.
The assessment increase is an average and will affect various properties differently meaning some people will see a lower increase and some could see a higher increase, according to Darren Moore, director of finance, who led early discussion on the 2014 budget during a four hour session Tuesday night.
Sylvan Lake councillors got their first look at the daunting task ahead of them during the first of three evenings dedicated to presentations from various town departments.
Another seven hours of presentations were scheduled for last night (Wednesday) and tonight (Thursday) before they begin deliberations on what they’ve heard Friday night and through the day Saturday.
A total of 19.5 hours has been scheduled this week to hear from department managers and then discuss their decisions.
Moore indicated that due to the average assessment growth, as well as new growth in the community, the town would take in an additional $500,000 if the tax rate were left the same as last year. The one per cent increase proposed would derive an additional $125,000. A supplemental tax (issued near the end of 2014 to tax construction completed during the current year) is projected to net $100,000 (about the same as 2013).
Utility franchise fees are expected to contribute an additional $100,000 to the town’s coffers (up from $1.21 million to $1.31 million) without an increase in the actual rate. Those are the fees paid by residents and businesses on their gas and power bills and then paid by their service providers to the town for the franchise to operate in Sylvan Lake. Of this total, $1 million is directed to reserves for future projects and the balance used to offset expenses during the current year.
To put the town’s budget into context, Moore provided councillors with detailed information on the town’s municipal debt, the 10 year capital plan and proposed borrowing over the long term.
That plan contemplates borrowing $3.3 million for the new fire hall with the first debenture payment of $135,000 being made during the year. (Debenture payments would be $270,000 annually on this debt.) Borrowing $1 million for a new ladder truck is also planned, but that might be stretched into 2015 rather than completed in 2014.
Then the plan proposes borrowing of $10 million for the multiplex redevelopment in 2015 and another $1.25 million for road projects and upgrades. Each of these would be debentured on a 20 year term at a fixed rate through the provincial government’s Alberta Capital Finance Authority. And payments need to be factored into future budgets.
A list of reserves, which totalled $15.5 million at the end of 2013, was also reviewed. And Moore provided a chart on how the proposed budget increase would affect the average homeowner and business.
Councillor Dale Plante questioned the differential between the residential and non-residential tax rates which, last year stood at over 85 per cent. “We’ve skirted around the issue. What is the incentive to attract new business?” he asked. “We’re always talking about the numbers we have. We’re not talking about the numbers we could have,” he said. “Personally, I view the tax rate on non-residential (commercial) as higher than it should be to attract new business.”
Mayor Sean McIntyre noted councillors need to determine their plan for attracting and retaining business and their relationship with the current commercial core.
“What are our other strategies, as far as economic development,” queried Councillor Chris Lust.
Plante agreed council needs an overall vision of where they want to go, especially because they’re talking about annexation, and what that might entail for non-residential properties.
Councillor Matt Prete suggested capping the non-residential rate. “The reality is we’re looking to send a message. Freezing the rate sends a message we’re interested in their business. It would have a minimal affect on residents.”
Moore presented several scenarios about how different changes would affect residential and non-residential properties.
He’d earlier shown councillors that while residential properties account for 86.5 per cent of assessment, they only pay 78 per cent of tax revenue. Non-residential properties, on the other hand, account for 13.5 per cent of taxable assessment but pay 22 per cent of tax revenue.
He also showed that 37 per cent of the town’s overall revenue is generated from taxation while other things such as sale of goods and services (utility charges, recreation fees, etc.), government grants and reserves make up the remainder of what’s generated each year.
The issue of the split mill rate and differential will be back on the table during discussions later in the week after council asked for further information on several ideas.
Of course it’s early going yet.
Councillors will spend lots of time listening, asking questions and making decisions before a final budget is established and the tax rate approved.
While departments are presenting their budgets, they’re also presenting a list of ‘edge’ items - those items which were initially proposed but “fell off” the budget during review by the town’s administration team. Some of those items could be added back into the budget by councillors while other items that are included could be deleted, as the task of juggling priorities continues.
More detail will be learned by councillors as they go through each department’s proposal. They heard about the finance, administration, communications and economic development areas during their first evening.
Public works and planning and development were scheduled to present last night, then the library and community development tonight (Thursday).
All meetings are open to the public.