FORT ST. JOHN, B.C – The City is facing a $3.6-million deficit according to the 2021 operating budget.
The report, which Chief Financial Officer David Joy will be present to council on Feb. 8th, highlights the proposed plan to balance the budget by a tax rate increase of 2.5 per cent, Peace River Agreement funds, pulling from contingency reserves, around $650,000, and increasing user fees, permits, and licences, “slightly”.
“This has been the most interesting budget over my 42-year career because of the number of budget challenges we have had, and the way that we’re able to keep any tax revenue increases fairly modest,” says Joy during a media opportunity on Thursday.
The COVID-19 pandemic implications to the budget, $1.1 million of the deficit, will be covered through the federal/provincial Restart Grant received last year.
“Overall, we are financially healthy municipality. The pandemic certainly was an extra challenge, but thankfully the federal government kicked in $3.8 million to offset pandemic related decreases in revenues or increase in expenses, and we applied that for 2020 and 2021.”
Joy compared the 2020 budget to 2021 to identify what was pandemic related.
“We are required to report back to the province and then prove that it’s pandemic related, which is a good thing. I mean, they just don’t give out money like that.”
Homeowners will pay $38 more in taxes this year based on home values at $302,895.
Recreational and non-profit taxes will increase by $124, commercial taxes will see a $293 jump, light industry will go up by $683, and major industry pays slightly over $9,150 more.
The City expects to receive $32.7 million in taxes this year. Joy says the City is maintaining the same level of tax revenue despite assessment values being down.
Other revenue streams include transfers, investments, the sale of services and grants.
Unfavourable costs to the budget include increased staffing costs at $974,000, increased RCMP costs at $485,000, a decrease in casino revenue at $400,000, and return in investments at $476,000.
“During 2021, the administration will be looking at other cost efficiencies and seeing how we can generate additional revenue beyond the usual one per cent user fees, and one per cent increase for user fees and try to find cost efficiencies elsewhere. ”
The City will is reinstituting penalties for late payments on utilities.
Joy mentioned “very little drop off” when the City waived late penalties and extended tax deadlines last year.
He says the City is expecting to recoup contingency funds this year in 2022.
“That would require generating additional tax revenue. The minimum contingency reserve has to be about $4.4 million. But the purpose of having a contingency reserve is not just to let it sit there; it’s there to sit in case there’s an emergency.”
Staff costs have increased, but the City expects a five per cent vacancy rate this year, which Joy says will be around a $1 million savings. The increase was due to three new staff members, overtime, increased benefit premiums, ratified collective agreements, and progressing wages.
The 2020 budget set aside $1 million to account for the RCMP’s unionization. Joy says costs are “increasing exponentially”.
“RCMP used to always have a 10 per cent vacancy rate, but not this year.”
Council will discuss the proposed budget on Monday with a public meeting date expected for March 8th.