By Dominic Abassi

‘Regressive and short-sighted:’ Council minority disappointed in last minute budget demands

Apr 24, 2018 | 6:08 PM

NANAIMO — The majority of Nanaimo’s Council handed the budget hot potato back to staff, calling for a last second tax cut with no direction on how to achieve it.

In a pair of 5-4 votes during Monday night’s meeting, the Council majority rejected the proposed 2018 financial plan and instead directed staff to cut the property tax increase a full percentage point to two per cent.

The surprising move came seven months into the budget planning process, after the provisional budget was approved at several levels and three weeks before the provincially mandated deadline for adoption. Monday night also marked the first time during the extensive budget process any councillors specifically mentioned the two per cent figure as a goal.

Coun. Bill Bestwick made the motion for staff to return with the reduced tax hike, with support from councillors Jim Kipp, Jerry Hong, Gord Fuller and Bill Yoachim.

“What we end up continually doing is taking surpluses through taxation, or over taxation if you will, and applying those surpluses to various reserve accounts. 2018 we’re looking at millions of dollars going towards wages, benefits and compensation. I have a challenge with that,” Bestwick said.

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Several of the councillors who rejected the budget voiced concerns over the $2.7 million in surplus from 2017’s general fund, wondering why that much money was needed and why it couldn’t be used to lower current tax rates.

“We have millions upon millions upon millions in war chests and reserves in other places,” Bestwick said, adding he “guessed” the 2018 surplus would be even higher.

Coun. Jerry Hong said he felt the City was “pre-taxing” too much. “From my perspective we’re putting too much money from our surplus into reserves. We should use some of that money to drop the tax rate back.”

Manager of accounting services Laura Mercer warned Council against using reserves to cut taxes. “Reserves generally should not be used to fund year-to-year operations because you will end up with highs and lows in your tax and user rates.”

It’s unclear how staff will achieve the desired one per cent reduction in this year’s taxes, as the motion passed by the majority did not reference any specific cuts.

Mercer said direction would have been helpful.

“Really your options for reducing the budget are using your surplus or reducing your contribution to the general asset management reserve, which both have implications. You affect your 20-year asset plan if you reduce that and you increase next year’s tax rate potentially if you use surplus.”

“I don’t have a clue where the options are,” Fuller said. “I look forward to staff coming back with some interesting, out-of-the-box ideas.”

Coun. Sheryl Armstrong said she didn’t think it was fair to place that burden on staff. “That’s our decision to make, it’s not staff’s because every time they go and do that we come back and get in big arguments and disagreements. If this is going to be decreased by one per cent, I believe it’s Council’s job to do that.”

“Council worked on this budget, passed motions about it then suddenly they said ‘No, that isn’t what we want.’ It must be very confusing to staff. And then for them to suggest staff put together a list of possible cuts was unconscionable,” coun. Diane Brennan told NanaimoNewsNOW, adding she felt the looming election had a lot to do with Monday’s discussion.

Coun. Ian Thorpe told NanaimoNewsNOW councillors had numerous opportunities during the last few months to change the budget. “To suddenly and arbitrarily demand a reduction to two per cent at the last minute I felt was unfair to staff.

“I am opposed to reducing the budget by using surplus or reducing contributions to the important asset management reserve.  If you use surplus this year, you potentially increase taxes next year…Reducing the budget this year is regressive and short-sighted,” Thorpe said.

Despite Monday’s apparent outrage over the proposed 3.01 per cent tax increase, all members of Council were involved in a series of decisions which drove up the figure. In March, Council added $350,000 to the 2018 budget to address homelessness and public safety issues. Staff made it clear at the time this year’s tax increase would jump with the spending.

Another pressure on this year’s budget is the strategic infrastructure reserve fund created in 2016. The fund diverted money out of general revenue and was intended to contribute to the annual payment for the events centre. A little more than $2 million, or two per cent in taxation, is being funnelled into the fund this year. The creation of the fund was supported by all of the five councillors voicing opposition to the budget on Monday night, despite staff making it clear it would increase taxes starting in 2018.

At the time, Bestwick called it “free money,” telling NanaimoNewsNOW the City needed to save money to pay for aging infrastructure.

Council is expected to convene for a previously unscheduled meeting on April 30 to try and reach a decision. The City’s tax rate must be adopted by a provincially mandated deadline of May 15.

dom@nanaimonewsnow.com

On Twitter: @domabassi