Director’s Corner: Budgets versus taxation

Vavenby Firehall up 24 per cent, Vavenby Community Hall up 106 per cent, Blackpool and Upper Clearwater Halls down tens of thousands

On Jan. 2 the Clearwater Times reported on the TNRD five-year financial plan that showed some large changes in budget amounts. Some very large changes appeared in the budgets: Vavenby Firehall up 24 per cent, Vavenby Community Hall up 106 per cent, Blackpool and Upper Clearwater Halls down tens of thousands, and the list goes on. Sounds scary – numbers bouncing all over the place. “What is my tax bill going to be?” many asked.

The simple answer is very little changes are projected for local services in Area A. Vavenby and Blackpool firehalls are remaining the same, community hall taxation is unchanged, Economic development, cemeteries, parks, transit and TV rebroadcasting again have relatively unchanged taxation.

So why the huge change reported in the financial plan? The large swings in numbers show either the completion of projects or new projects beginning. These projects are funded through various grants, previous years surplus carried forward and capital reserves that have built up over time.

In one case incomplete accounting created the large variance of budget versus taxation. Basically the cheque was in the mail (aka my briefcase) as I delivered a cheque to the TNRD from the Vavenby Firehall to pay off #1 pumper truck a year early.  The bookkeeping on this had not been processed at the time the report was written.

TNRD taxation for services that include the entire region or most of it will see a three per cent increase. Libraries, solid waste and administration are in this part of our taxes. At some point we must change budgets to reflect inflation costs. Taxes for most of these services have remained essentially the same since 2006, while costs for labor and energy have continued to rise.

Hospital taxation is also set to increase, in this case substantially, but for good reason. Massive construction projects for Royal Inland Hospital in Kamloops are planned over the next 20 years.  Area residents contribute up to 40 per cent of these costs and in this case the projects will be several hundred million dollars. Hospital taxation has remained historically low relative to the costs and the reserve account is extremely small. In order to avoid some of the borrowing cost tax rates are being increased in advance of the projects to establish a down payment for our share of the costs. The bigger the down payment the less we must borrow which in turn means lower dollar amounts going towards interest costs.

Over the next three years hospital taxation will rise $21 per year for a total extra of $63 per year for the average priced house of $275,000. If your house is assessed at less than this your increase will be lower while if your assessment is higher your actual cost will be higher as well. Yes, it’s an increase of 100 per cent in total but the actual dollar amount is small and the reason is worthwhile.

My preference regarding taxation has always been to establish a rate that works in the long term and to avoid fluctuations up and down. Whenever possible borrowing costs should be avoided, as this does not put money into infrastructure or services. Living within our means without degrading services is another philosophy I follow. Local services have been managed extremely well and we have continued to maintain status quo taxation even accommodating inflation costs within existing budgets. Politically, nobody notices.

– Tim Pennel, TNRD director for Wells Gray Country (Area A)