The Greater Nanaimo Chamber of Commerce says it is going to closely examine the city’s budget process, specifically on long-term asset management and tax fairness for commercial properties.
The first draft of the 2013 municipal budget was scheduled to go before city council yesterday. Council has until May 15 to officially adopt the final budget, though the majority of deliberations and public input take place in January and February.
“With a responsibility for over $160 million per year of expenditures, the City of Nanaimo has to ensure that it is providing services to the community in the most effective manner,” said Mike Delves, chairman of the chamber of commerce.
2013 is the first year in quite some time where residential, commercial and industrial tax rate increases are in line, pegged currently to increase 3.6 per cent each property class for the coming budget. Over the past several years industrial tax rate increases have been lowered as much as 20 per cent to spur economic development in the area, shifting the tax burden to residential property owners.
But the chamber is concerned about commercial tax-rate increases, saying that while the tax-rate increase is similar for all three classes, in reality commercial businesses are paying three times the amount of tax for receiving the same services as residential taxpayers.
In Nanaimo, a home valued at $390,000 generates just over $2,800 in tax revenue, while a business assessed at the same amount has to pay around $8,000.
“We need clear disclosure on the property tax rates, not just per cent increases, and this is something our chamber members have said they will be closely scrutinizing,” said Sue Allen, chamber CEO, adding that a preferable ratio between commercial and residential tax responsibilities would be parity.
Allen said that most small businesses don’t use three times the amount of city services as residents, so should not be required to spend three times the property tax.
The Canadian Federation of Independent Business is calling for a 2:1 ratio, commercial to residential respectively.
Nanaimo sits at about the middle of the pack for commercial tax rates for B.C. communities with a rate 2.95 times that of residential. Coquitlam is the highest in the province at five times, while Saskatoon is one of the nation’s lowest at 1.75, according to federation statistics.
Of the $160-million city budget, about half is generated through property taxes with the balance largely coming from grants from senior levels of government, such as more than $17 million to pay for the new $65-million water treatment centre scheduled to open in 2015.
Coun. Fred Pattje said he welcomes the chamber’s participation in the budget deliberations.
“I appreciate all the work the chamber is doing in conjunction with the city, such as its Successful Cities initiative,” said Pattje.
“There is absolutely nothing wrong with them keeping a very close eye on what we’re doing. This is part of influencing, which is fine, we get a lot of organizations and persons lobbying and that’s part of the process.”
Pattje added that he shares the chamber’s concerns over long-term infrastructure funding, noting that while the city’s assets are mostly in good shape now, the required $12 million needed to be put aside annually for future maintenance and growth is underfunded by more than $3 million every year.
“Of the goals in the recent Corporate Strategic plan, asset management is probably the most urgent one,” said Pattje.
Senior government downloading on municipalities remains a concern at the local level of government, yet for each tax dollar accounted for in Canada municipalities receive eight cents.
Nationally, municipal infrastructure is underfunded by about $150 billion.
Delves said he understands the increasing pressure council is put under when it comes to providing services to residents and businesses, and that the city’s sole income is generally property tax and grants, but by participating in the budget process he said the chamber of commerce hopes to assist council in finding other ways to spend taxpayers’ dollars more efficiently.
“There are certainly challenges within the constraints of what the city has to deal with as far as budget preparation goes, and the city certainly meets all of its legal obligations and what is required of them, but for successful planning and working to become a successful city we need to go above and beyond,” said Delves.
“Doing things because that’s always the way we’ve done them just isn’t going to get it done.”