Property taxes set to rise; flat tax dropping

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Posted: April 25, 2018

Property taxes set to rise; flat tax dropping

Kimberley City Council Report

By Nowell Berg

On April 23, City of Kimberley council held its regular bi-monthly meeting.

Councillors Kent Goodwin, Albert Hoglund, Nigel Kitto, Darryl Oakley and Sandra Roberts were present along with Mayor Don McCormick. Coun. Bev Middlebrook was absent.

Property taxes set to rise

While approving the Finance Department’s five-year Financial Plan (2018-2022), council also paved the way for a 2.01% property tax increase.

All five classes of property – Residential, Utilities, Light Industry, Business, Recreation/Non-Profit – will face the same increase.

Mayor McCormick stressed the property tax increase was to cover inflation caused by cost increases for electricity, natural gas and other products and services city departments use.

Almost 84% of over-all property taxes are collected from the Residential component. Businesses contribute another 14.5%. The Light Industry component barely contributes 0.2%.

Across the East Kootenay, the residents of Kimberley pay the highest single-family home property tax compared to every other municipality. Kimberley’s average residential tax sits at $2,267, which includes the variable rate and the flat tax.

Cranbrook has the next highest average tax level ($2,024) followed by Rossland at $2,010.

Flat tax

Council also had to decide whether to decrease the flat tax on improved properties. This issue raised considerable discussion among council. Some see the flat tax as punitive for lower income residents. On the other side of the issue are councilors who see the lower flat tax as hitting higher assessed properties more than lower assessed properties.

Jim Hendricks, Chief Financial Officer (CFO), pointed out that when the flat tax is reduce by $80, as proposed, the resulting $311,000 lose in flat tax revenue “shifts over to the variable tax to make up that lost revenue to ensure there is no lose in tax over-all.”

The CFO’s report to council states, “The flat tax reduction and the corresponding variable tax rate increase would result in the annual property tax adjustment being proportionately greater for properties with higher assessed values.”

First of the mark, Coun. Oakley said, “Whether this bylaw is adopted or not, I think the burden of the flat is really difficult [on residents] when you don’t have any industrial taxation.”

Mayor McCormick added, “As everybody knows I’ve been against the reduction of the flat tax from the beginning, not so much in getting rid of the flat tax, but how we’re doing it. Moving the lost revenue over onto the variable tax rate is not a good long-term solution.”

Mayor McCormick pointed out council faced a situation because Coun. Middlebrook was not present. He noted that in the past councilors in attendance had voted “three against it and three3 for it.” He explained that if they were to vote according to past inclination at this meeting, then the flat tax reduction would be “defeated.”

To defeat the reduction would not reflect the intent of council if Coun. Middlebrook was in attendance. Second, a defeat would place an incredibly large burden on the finance dDepartment requiring them to re-work the whole taxation and financial plan for the next year.

Coun. Goodwin said, “Mr. Mayor, I appreciate your remarks. I think it is very gracious of you, even though you are opposed to it, to comment on your understanding of the dynamics of council. Good for you.”

Coun. Hoglund: “I’ll be voting against it [flat tax reduction]. I voted against it right from the start. I understand the concerns and I understand the onus it will be putting on the CFO, but I disagreed with it from the start and I can’t agree to it.”

In his final comment, Coun. Oakley said, “It’s an election year, let the new council decide on what the direction will be. I believe we’ve reduced it [the flat tax] enough to help.”

For Mayor McCormick, the flat tax reduction is “tinkering” and just “moving money around” instead of making “fundamental change to how we approach taxation for all our tax payers in town. The goal is to get new money.”

In summing up his position, Coun. Goodwin said, “I definitely believe the fairest forms of taxation are based on people who have the ability to pay, pay a little more and people who just can’t make ends meet pay less.”

With that the mayor called for a vote. Councilors Goodwin, Kitto, Oakley and Roberts voted in favour. Cou. Hoglund and Mayor McCormick voted against. As a result, the property flat tax will drop by $80 to $546 per improved property.

SunMine production below estimates

Chief Administrative Officer (CAO) Scott Sommerville presented a first quarter (Q1-January, February, March) report on SunMine (pictured above) electricity generation.

Overall, the first quarter power production was 89.6% of projected generation levels.

Revenue Generation (Q1)

January – $ 6,284 on 47.25 MWh

February – $13,560 on 111.30 MWh

March – $18,712 on 153.43 MWh

“January wasn’t great, but February and March have been excellent,” said Sommerville. He is hopeful power generation for the next three quarters will be above projections. “Its operating fairly well, mechanically 95 of 96 trackers were lined up” and generating electricity on his last visit.

He also noted there have been two tours of the SunMine and four more school tours were already lined up.

Mayor McCormick was surprised production even reached 89% given the cloudy winter.

The third anniversary of the SunMine opening will be June 22.

Community Initiative funding announced

Council approved Columbia Basin Trust Community Initiatives Funding allocating a total of $97,585 for 2018/2019.