Police funding decision could foil Nelson’s planned 1.75% tax increase

The provincial director of police services is expected to rule on Nelson's police budget any day.

Nelson's chief financial officer Colin McClure presented council's proposed 2016 budget to the public on Thursday evening.

Nelson city council is proposing a 1.75 per cent increase to both residential and commercial taxes for 2016, but an impending decision from the director of police services expected in the next few days could change that.

In its proposed budget for 2015, the Nelson Police Department asked council for an additional $310,000 for two new officers and an administrative staff person. Council declined the request, and the police department appealed the matter to the provincial director of police services, who has the power to dictate how many police officers a community must employ.

It has taken more than a year for the director to make a decision and in the meantime the police department again requested a $310,000 increase for 2016. According to chief financial officer Colin McClure in an interview with the Star today, the director has made his decision or is about to make it in the next few days.

So the budget information presented by McClure at a public open house yesterday could be made obsolete if the director of police services decides the city has to come up with more money to enhance police staffing.

This could potentially mean an additional tax increase of four per cent. The rule of thumb at the city is that a one per cent increase brings in $75,000.

Asked where the city would come up with $300,000 if the director of police services decision warrants it, McClure said, “I don’t believe they (council) will go for an added four per cent tax increase. They might be willing to add some of it to the tax rate, then find the rest internally. For example, we have had a pretty mild winter and we could take it out of snow plowing this year and come up with something more permanent next year.”

The city’s snow plowing budget is $700,000 annually.

The following is a summary of McClure’s report to the public meeting yesterday, in which he proposed a 1.75 per cent tax increase, independent of the impending decision by the director of police services. The text of his powerpoint presentation is attached at the end of this article.

The proposed 1.75 per cent increase would cost the owner of a $329,000 home an additional $26 per year and would generate $131,250 in revenue for the city’s operations fund. For a $1,000,000 commercial restaurant, the increase would mean a tax increase of $163.

The city’s tax revenue is derived 25 per cent from businesses and 75 per cent from residents.

Water, sewer, and hydro are not part of the operations fund or property taxation because they are self-funded through their own taxes and fees. They are all proposed to rise this year by three, two, and 2.6 per cent respectively for residences.

Of the city’s $42-million budget, $17.2-million is for the city’s operating fund and that’s where residents’ tax money goes: fire, police, garbage, cemetery, parks, transit, library, roads, salaries and benefits, and so on. The other portion of the $42 million is utility operations.

Some of the operations money goes into statutory (required by city bylaw) reserves that the city maintains for such things as equipment, buildings, the airport, and downtown and waterfront upgrades.

As in most years, tax revenue will only pay for a portion — in the proposed 2016 budget, 58 per cent — of the city’s operations expenses and the city must make up the rest from other sources including grants from other levels of government, transit, parking tickets, and garbage revenue. But even then, there will still be a shortfall of $419,250, according to McClure.

This will be made up by the tax increase of 1.75 per cent or $131,250, as well as taxation on new building developments, new tenants at the city-owned city hall building, a larger than usual Nelson Hydro contribution and an increase in revenue from the use of the city jail by the RCMP and the sheriff’s office.

If Nelson residents’ tax bills don’t seem to match the information given here, that’s because there’s a catch. The city also collects taxes on behalf of other agencies, so city taxes account for only 38 per cent of residential tax bills, while the rest consists of taxes being collected for the Regional District of Central Kootenay (19 per cent), school taxes (39 per cent), regional hospital taxes (3 per cent), and the BC Assessment Authority (1 per cent).

McClure said police and fire services add some guesswork to the budget because the fire department  and police collective agreements expired in 2011 and 2012 respectively. Negotiations are underway between the firefighters and the city, and negotiations with the police have not started yet. Not only are the upcoming wage increases unknown, but McClure has had to budget for some hefty retroactive payments to be made when settlements are reached. He said 90 per cent of the police budget and 85 per cent of the fire hall budget are for salaries and benefits.

Salaries and benefits make up about 65 per cent of the city’s operating budget. McClure said the city employs 162 people and that that number has not changed much in the past five years.

Fire services account for nine per cent and police 18 per cent of the city budget. Other portions of the budget include transportation services at 19 per cent, general government services 19 per cent, recreation and cultural 11 per cent, debt repayment 5 per cent, and contribution to reserves 10 per cent.

McClure’s said the city’s 2016 capital plan of $7.1 for water and sewer includes completion of the Mountain Station UV project, the continuation of the relining of sewer pipes, and hydro distribution system upgrades. In the area of general capital, $5.5 million will go to general paving and park improvements, building improvements, IT network cabling and fibre lines, and vehicle and equipment purchases. He said 80 per cent of the general capital budget will be funded by statutory reserves.

McClure emphasized the value of Nelson Hydro, saying that Nelson is the only municipality in western Canada that generates and delivers electricity. He said that without Nelson Hydro’s contribution to the city, it would have to increase taxes by 36 per cent.

Correction made on February 20: The city employs 162 people, not 126 as originally reported.

2016 Financial Plan Presentation Feb 18

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