Nelson property taxes will increase by four per cent this year for both businesses and residents, if council approves a budget proposed by its chief financial officer.
Colin McClure says the proposed increase is due to three factors: inflation, the hiring of a deputy police chief, and upcoming negotiated retroactive pay increases for unionized police and fire staff.
McClure said wages comprise more than 85 per cent of the city’s police and fire budgets.
In 2022, based on a single family dwelling assessed at $636,000 (the current average in Nelson), city property taxes will increase by $68, sewer rates by $10, water rates by $7, garbage and recycling by $25, for a total of $110 per year.
The garbage and recycling increases will fund a new municipal composting program.
For commercial properties, based on a $1,000,000 assessed value, property taxes will go up by $290 per year, sewer rates by $31 and water by $22.
Previous annual tax increases for both businesses and residences were 1.75 per cent in 2021, no increase in 2020, and two per cent in 2019.
McClure outlined these figures at a public budget presentation on April 14. The draft budget is set for approval by council on May 3.
The 1.5-hour presentation can be viewed at https://bit.ly/3L79rsG.
In his presentation, McClure discussed the snow removal budget, a subject of some alarm at city hall in January when the city received a metre of snow in 24 hours.
As an indication of the difficulty of budgeting for such an unpredictable expense, McClure pointed out that in 2016 and 2021 the city was under budget for snow removal, it was on-budget in 2020, and it overspent the budget in 2017, 2018, and 2019.
The proposed 2022 snow removal budget is $749,743, McClure said. The city had already spent $978,899 by the end of January, $170,000 of that on contractors brought in at the last minute to help out. The city is still faced with the likelihood of more snow in November and December.
McClure said that shortly after the storm he went to council and pointed out the under-budget snow removal in the previous year, and asked if those savings, and also some money taken from financial reserves, could be used to clear the 2022 snow, and council agreed.
“That takes the pressure off council having to raise taxes because we can see at $200,000 we would be looking for a two per cent tax increase just to deal with the snow removal in 2022.”
A one per cent tax increase brings in $95,000, McClure said.
Tax notice breakdown
McClure pointed out that city taxes and fees comprise about half of residents’ tax bill. The city also collects taxes for the Regional District of Central Kootenay, School District 8 and the West Kootenay-Boundary Regional Hospital District.
This year, the taxes city residents will pay to the RDCK will increase by 3.6 per cent following a 6.4 per cent increase in 2021. The RDCK tax contributes to some regional services that city residents also use, such as the community complex, regional parks, and waste collection services.
In 2021, for every $100 in taxes paid by Nelson residents, $48 went to the city, $28 to the school district, $20 to the RDCK, and $3 to the hospital board.
Revenue and expenses
McClure reported that total revenue for the city in 2021 was $56,106,994 with Nelson Hydro sales the highest contributor at 36 per cent of the total, and taxes providing 21 per cent.
McClure said that without the annual dividend from Nelson Hydro, the city would have to increase taxes by 30 per cent.
Total expenses for 2021 were $36,994,858, with Nelson Hydro operations taking 36 per cent of the total. Hydro is an expense because Nelson’s hydro facility produces only half the power the city needs, with the rest purchased from FortisBC.
The second highest expense was protective services (bylaw, police and fire) at 20 per cent.
The excess of revenue over expenses is used to pay down debt and is added to reserves that are maintained for such things as emergency situations, equipment replacement, and capital projects.