The City of Rossland has cut $250,000 from this year’s budget, allowing it to raise taxes 4.75 per cent rather than 10 per cent.
Elma Hamming, manager of finance, explained the city’s approach at a public meeting regarding the 2017-2021 Financial Plan last Thursday.
“During end of 2016 and beginning of 2017, we sought public input and based on that input, developed a 2017 budget that balances upgrades with community amenities,” said Hamming. “We tried to contain the operation expenses. We did some reallocation, based on making efficiencies and how we thought the organization should run, and reflected that in the operational budget.”
Taxes increase 4.75 per cent
Public input sessions conducted by Terry Miller showed that most respondents were comfortable with a tax increase between two and five per cent, putting 2017’s 4.75 per cent tax increase within the range believed to be acceptable to the public.
Janice Nightingale was one of four Rossland residents who attended the public meeting regarding the budget, and asked about whether or not the city had access to a significant number of people in the community during the public engagement, which included not only the sessions conducted by Miller, but a Thoughtexchange process as well.
In response, Mayor Kathy Moore said, “This council has done more to get public input than any. Usually, the public input comes at this meeting, at this time in the process, and there’s one or two people in the audience.”
“Not only did we have the quantity, we also had the cross-section of people from the community,” added Coun. Marten Kruysse. “So we had young to old and, yes, some of the focus group sessions … the people who actually showed up tended to be a little bit older, but a lot of the younger people were also invited and then we captured them through the Thoughtexchange process. So if you looked at the methodology or approach for public input, it’s probably more representative than it’s ever been.”
The 4.75 per cent increase amounts to an average of “about $190 per year” based on the average assessed home value, according to Hamming.
The five-year plan also includes a four per cent tax increase in 2018, a two per cent increase in 2019, a four per cent increase in 2020 and a two per cent increase in 2021 — but none of that is fixed.
“We always do a five-year plan; the plan never stays the same for five years,” said Moore. “It gets adjusted each year. So this is what we think about now, but next year perhaps the increase will be 4.5 … it’s not locked.”
The $250,000 in cuts kept the increase under five per cent, but there are also a number of increased expenses.
Among them are a $61,000 increase to operations costs to maintain current service delivery, which is accounting for inflation, $73,600 in increased regional sewer utility fees, which the city hopes to decrease in the future with its Comprehensive Sanitary Sewer Inflow & Infiltration Strategy, and the $85,000 of its own funds the city will need to spend to carry out that strategy.
There’s also $66,000 in additional debt financing costs for the Washington Street project loan (see below), a $12,000 increase for the Climate Action Reserve fund (as voted on by council in October), $59,000 to purchase new software at City Hall, and an additional $17,000 for bylaw enforcement.
Water and sewer increasing 4.5 per cent each
Rates for water and sewer increased 4.5 per cent each this year, amounting to a total of $623, 399 in revenue for water and $586,089 for sewer. But revenue for both services still falls below the actual cost — $668,111 for water and $666,856 for sewer — as the city moves away from paying the deficit through general taxation, and toward a user-pay model.
Rates for both are expected to increase 4.5 per cent each again in 2018 and again in 2019, with the same increases proposed for 2020 and 2021, pending a review of the Asset Management Investment Plan (AMIP) the city is currently working on.
Budget includes grants and expenses for four special projects
The city has four special projects it’s working on in 2017 — three operational and one capital — all of which are grant-funded to some extent.
The first is the AMIP, for which the city received a $75,000 grant that will fund 100 per cent of the project. The purpose of the AMIP is to review all city assets, identify any necessary capital expenditures and finalize a Long Term Capital Plan.
The second is the Comprehensive Sanitary Sewer Inflow & Infiltration Strategy.
“The city was also successful in getting $415,000 grant for the inflow and infiltration analysis, and that’s 83 per cent funded,” explained Hamming. “This will … identify areas that need maintenance and then we hope to reduce the amount of flow, so that our regional sewer utility costs go down in the long-term.”
The third operational project is planning for the Emcon Lot, or Mid-Town Area. The city received a $10,000 grant to cover 100 per cent of the project. The hope is that successfully developing the lot will result in increased tax revenue for the city.
Finally, the Spokane Street Infrastructure Improvement Project is a major capital project for which the city received over 3.6 million in funding. The current budget projects the cost of the project at $4.4 million, but Hamming explained that the city has since received tender on the project, and it’s much higher than expected.
“It’s about a million dollars over from what we estimated,” she said. “There’s a lot of demand right now for the contractors, so rates are high because the province released all that grant funding, so the contractors are just having a field day.”
Though the current budget doesn’t reflect this change, Hamming already has a plan. She explained that the city was approved to borrow $4 million for the Washington Street project, but only used $3 million.
“We didn’t want to borrow the whole $4 million because we had a surplus because of all the capital items that we didn’t get to during 2016,” she said. “So we used our own surplus to fund the rest of Washington to help keep our interest payments low.”
Now that the tender on Spokane has come in $1 million over, the city will borrow the full $4 million for Washington, and use the $1 million surplus to fund the difference on Spokane.
“That will be in a budget amendment later on in the year,” said Hamming. “There wasn’t enough time to get it into this draft.”
Grants account for largest source of revenue thanks to Spokane project grant
The largest source of revenue for the 2017 budget is grant funding, which accounts for 40 per cent of the $14.8 million in funding for operations and capital.
The grant for the Spokane Street Infrastructure Improvement Project accounts for 62 per cent of the $5,851,200 grant total, while the grant for the Comprehensive Sanitary Sewer Inflow & Infiltration Strategy accounts for seven per cent.
The second-largest source of revenue is taxation, which amounts to just under $5 million, or 34 per cent.
A quick look at the biggest expenses
The city’s expenses for 2017 total $15.9 million — excluding $305,650 in debt principal payments, which are listed separately — with $7.7 million, or 48 per cent, allocated for capital expenses and $8.2 million, or 52 per cent, allocated for operations expenses.
The majority of the capital expenses are for the Spokane Street project, which in the current budget (pre-amendment) accounts for 57 per cent of capital expenses.
Transportation and public works accounts for the largest part of operations expenses at 21.8 per cent. This includes the work done on city roads and parks.
The second-largest operations expense is general government at 20.9 per cent.
“General government … it’s all the administration of running City Hall, it’s IT, it’s the RMI Initiative, it’s the CARIP – the Carbon Action Revenue Incentive Program,” explained Hamming.
City converting Washington debt to long-term debt
The city will be converting its short-term debt on the Washington Street project loan to long-term debt before the end of 2017.
“We’ve been using it for short-term borrowing, but we do have to covert it into long-term debt by the fall,” Hamming later explained to the News.
The city’s debt can not equal more than 25 per cent of its revenue, and currently the city’s debt is at about 12 per cent of its revenue.
Capital projects draw down reserves
Due to recent capital projects, the City of Rossland’s reserves are expected to fall below $3 million in 2018, whereas they were just below $6 million in 2015.
The reserves are cash investments, with strict guidelines as to what they can be drawn on for. The city makes interest off its reserves and that revenue is included in the budget under “Sale of service and other income.”
Following the public budget meeting, council adopted the final budget at Monday night’s council meeting.