Houston council continues to debate the size of the property tax increase for 2023, amid worries about the financial impact on the community of Canfor’s decision to close its sawmill in April.
Although the District of Houston has financial reserves and has established a fund to stabilize its operations if necessary, key District officials caution that low property tax increases can’t continue indefinitely.
A planned 2.5 per cent increase originally contemplated for this year would strain the District’s ability to run both its everyday operations, provide for capital expenditures and continue to build up its reserves, District chief administrative officer Michael Dewar told council March 7.
He likened the situation to that of balancing on a teeter-totter, saying the ideal situation is having a taxation income each year that meets operational, capital and reserve accumulation for that year.
Dipping into reserves excessively changes that equation, Dewar added.
“Do you want to go on the low end now and then on the higher end later on,” he said in describing the movement of a teeter-totter.
Councillor Rebecca Hougen said any tax increase decision should take into account of the ability to pay by the people whose incomes are affected by the slowdown that’s now underway ahead of the mill closure next month.
“Contractors are already tightening their belts,” she said.
“We have to think about those people who pay us,” said councillor Tom Euverman in agreeing with Hougen.
Councillor Troy Reitsma did point out that projections could see the District facing a tax increase of 30 per cent by 2026 if there’s a continued draw down of reserves.
And Mayor Shane Brienen reminded council of the impact on the community when West Fraser closed its mill here in 2014.
Decisions were made quickly that affected the District’s ability to protect its infrastructure, he said.
“In 2014 we weren’t ready for that at all,” Brienen said.
“We have to have a plan going forward,” he said in advocating the need for sustained revenue levels.
What’s crucial, Brienen continued, is for the District to have the resources to position itself for a different kind of economy then the one that the area has experienced for years.
In the end, council has asked its staffers to consider the implications of increasing one revenue-producing area and lowering one cost area as a way of buffering a final property tax decision.
The revenue producing measure comes in the form of taxes paid by utilities, an issue raised by Councillor Troy Reitsma.
“I’d like to see that utilities be maximized, not to reduce anything else but just some extra money so we can limit the property tax increase,” he said.
As for cost control, Dewar presented council with a list of capital expenditures amounting to $425,000 he said might either be deferred to future years or eliminated altogether.
One of those suggested cuts, however, the plan to spend $100,000 on bringing the District’s development plan bylaw up to date, did draw a question from Councillor Jonathan Van Barneveld.
“We need to get our ducks in a row and be investment ready,” he said of an economic transition. “I’m OK with deferring, except for that one, the development bylaw redo.”
Dewar told council a redone proposed budget will be ready when council meets again to discuss taxation and spending.
In surveying the situation around the region, Dewar said Burns Lake is looking at a 6.73 per cent increase, Smithers hopes to keep its hike to 10 per cent, Kitimat is contemplating an increase of 8.8 per cent and Terrace is looking at 10.33 per cent.
Once council has a document it is comfortable with, a period of public consultation will then begin.
The council does, however, have a deadline of May 15 by which it must have approved a five-year financial plan that begins with its 2023 spending and taxation decisions.