COUNCIL COGITATES ON FINANCIAL CHALLENGES
By Sara Golling
Committee-of-the-Whole Meeting: March 21, 2016, 3:00 pm
All Council members were present. Just before the meeting, Mayor Kathy Moore took a few seconds to pass a home-framed series of three bobsled race snapshots to the Council Bobsled Team — John Greene, Andy Morel, Andrew Zwicker, and Moore herself. The final picture captured their crash, with team members spilling out onto the snow. After that brief moment of levity, Council buckled down to the serious and stressful business of reviewing the elements of a draft financial plan for the next five years.
Review of Proposed (Draft) Financial Plan
Interim Chief Financial Officer Steve Ash introduced the topic, explaining that there will be adjustments made to the draft after the Public Input Session on April 13, and that the draft budget and information he was presenting is intended to help Council in their decision-making. He explained that the capital expenditure — investment — in the next few years, is considerably above historical expenditures; and he acknowledged that it is not advisable to delay any of those expenditures “for a whole host of reasons.”
He noted that the expenditures in the plan reflect the need for increased investment in basic infrastructure; and that there is a “surge” in expenditures in the next few years, which will then even out and stabilize. He laid out the basic issue: costs can be covered by raising taxes, or by reducing services, or by a balance of those measures. “The train wreck is in 2017,” he noted, when the necessary expenditures incurred in 2016 “come home to roost.”
He stated that tax increases above 5% are considered “negative to growth” — that is, discouraging residential settlement.
He showed different potential scenarios: One with no reduction in costs, which would probably result in an increase of 10% in the City’s portion of property tax bills. Morel pointed out that this would not mean an overall increase of 10%, but Ash also pointed out the Regional District taxes and other charges are not likely to remain static either.
Ash explained the need for business plans for all City buildings, and pointed out the need for expensive maintenance and repairs for most of the buildings. Speaking about the arena, he stressed that no one is saying it will be closed, but that it does pose very significant challenges to a cash-strapped City.
He contrasted two opposing points of view about social programs: one, that Council needs to spend money on them to further a sense of community and make the town a desirable place to live. The other point of view is that Council are stewards of taxpayers’ money, and are obliged to provide only core services. And that leads to the question of what “core services” include.
Ash spoke about the increased funds that must be paid for Regional District expenses (such as fire services) because they are based on assessed property values, which are higher in Rossland. The result of the higher assessments is that residents of Rossland are paying (on average) $314 per dwelling for regional services, while the residents of Fruitvale are paying only $201 per dwelling on average; that’s over $100 less per dwelling.
Councillor Lloyd McLellan mentioned that Regional District personnel have been showing interest in what our Fire Services Task Force is doing.
Ash stated that he thinks we have to consider the cost of transit services; Rossland pays $190,000 for limited and often underutilized service. He mentioned that the AGLG advises municipalities to pay close attention to regional services (and their costs). He also acknowledged that there has to be provision in the budget for improving the City’s IT system, as it must be improved to provide basic business service.
Ash then presented some options for saving $250,000 to avoid, as much as possible, increasing taxes. He stressed that these options were only for discussion and are not recommendations. One was closing the arena; another was opting out of some regional services; and he has calculated that if Rossland were paying on the same basis as other communities, it would save about $50,000 a year in expenses. He also presented a “combination of options” — reduce arena hours, reduce recreation programs, reduce community grants, reduce regional services, and increase revenue by other means than property taxes.
Ash presented some “key assumptions” for the 2016 draft budget: these included carrying on as usual with recreation, City buildings and Regional Services; raising the City’s portion of property taxes by 3.5%; implementing the new rate schedule for water and sewer; savings for liquid waste management based on reduced flows; payroll increases of 2%; and community support grants of $287,500.
He repeated that capital expenditures in 2016 will dictate tax changes necessary in 2017; and that decisions are required in mid-2016 to enable operating costs to be reduced in 2017. Council spent time poring over sheets of figures with guidance from Ash, and discussing various line items.
Ash emphasized that “we can’t pre-judge public input,” and suggested capping tax increases at a certain percentage, and making final decisions on the balance between tax increase and cost reduction based on public input.
McLellan commented on the unfairness of charging Rossland based on our rising assessments; the higher charges reflect neither any increase in the cost of delivering the service to Rossland, nor any increased ability to pay. Councillor Marten Kruysse commented that tax increases “compound” and he feels they are very unfair to some residents, and that Rossland becomes “less and less competitive.” Morel pointed out that the federal budget may contain grant possibilities for local governments, and that if Rossland can succeed in getting grants, it may alleviate the financial crunch somewhat.
Kruysse questioned the rates of interest the City pays, and the length of borrowing; he pointed out that if a loan is a 55-year loan, “you’re just paying interest, not really reducing the principal.”
Council confirmed that the public input session on the five-year financial plan is on April 13 at 7:00 pm at the Prestige.
Councillor Aaron Cosbey suggested that, when eliciting public input, Council should start by first listing the successful measures that the City has taken to reduce costs and upgrade infrastructure; Ash agreed, and pointed out some of Rossland’s excellent infrastructure accomplishments to date. He described our water system as one important example. He also reported that because Rossland is now paying for sewage based on actual measured flows, and has been working hard to reduce inflow and infiltration into sewer lines, we have reduced that expense by about $100,000 over the past year.
Moore mentioned that during last year’s Thoughtexchange process, most people who responded to the surveys were less upset with the prospect of rising taxes than she had expected, and were very understanding of the City’s challenges. But she also acknowledged that not everyone in Rossland took part in that process.
Council adjourned the CoW at 4:30 pm, and everyone scattered to find some dinner; your reporter scurried home to make something to eat before rushing back to City Hall for the regular Council meeting at 6:00 pm, reported separately.
