Nanaimo city councillors have a tough decision ahead of them as they chart the course forward on their five year financial plan and a projected property tax increase in May. (File Photo/NanaimoNewsNOW)

By Alex Rawnsley

TOUGH CHOICES

Financial plan in limbo as Nanaimo city council weigh immediate COVID-19 relief versus future protections

Apr 20, 2020 | 3:56 PM

NANAIMO — City councillors have a difficult decision ahead of them about the projected property tax increase during the COVID-19 pandemic.

At a special council meeting on Monday, April 20, councillors received a series of options on how to move forward with 2020-2021 budget deliberations.

City council already agreed to extend the payment deadline for user rate bills to provide relief during uncertain times.

The first option involved a property tax and asset management rate increase of 4.5 per cent, which is lower than the 5.2 increase projected in December, 2019.

It would raise property taxes $144 for the average Nanaimo home valued at just over $500,000, with fees included. The total property tax paid for such a home would be $3,111, up from $2,967.

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If councillors approved the moderately lower increase, it would preserve nearly $3 million in a special reserve to cover shortfalls going forward without any tax increases.

However, City staff said it would provide little help for residents facing financial difficulties during the COVID-19 pandemic.

A second option involved using reserve funds to soften the blow in the short term. It would reduce the 2020 increase to 3.8 per cent, but raise the starting point for 2021 budget discussions.

Wendy Fulla, manager of business, asset and financial planning, said the second option provides a little bit of help but leaves the City in a difficult spot.

“If we have declining revenues because it takes time for things to come back, unless we cut service levels it’s going to be difficult to maintain a lower property tax rate,” she said. “Council may be faced with tough decisions with what they want to do with service levels.”

The final option presented involved no change to property taxes from 2019 levels with a one per cent fee for asset management.

This move would raise property taxes on the average Nanaimo home only $21 while draining the special reserve. The 2021 budget deliberations would have to start at a 6.8 per cent increase.

City councillors discussed a wide variety of tweaks to the options presented, including deferring all taxes for 2020 and adding a year to the asset management schedule.

Councillors were told all those proposals would result in serious funding challenges for projects in the City’s five year plan.

Councillors Sheryl Armstrong and Tyler Brown asked about projected gas tax and casino revenue money, which are major cash flows for significant City projects.

Both sources of funding were currently projected to meet the City’s needs to achieve items in the five year plan.

No decision was reached during the special council meeting.

Councillors decided to send the proposals back to staff with additional information about adjusting the penalties for paying late property taxes.

Councillor Brown advocated for pushing the penalty off for as long as possible to ease the strain on homeowners’ wallets.

The final budget must be approved by May 15.

alex.rawnsley@jpbg.ca

On Twitter: @alexrawnsley