City defends monetary reserve policy

Roughly $2.7 million dollars from 2010 taxation will be going into reserves, and city watchdog Fred Taylor said he wants to know why the money wasn't used to reduce Nanaimo's 2011 tax rate increase to zero instead.

Roughly $2.7 million dollars from 2010 taxation will be going into reserves, and city watchdog Fred Taylor said he wants to know why the money wasn’t used to reduce Nanaimo’s 2011 tax rate increase to zero instead.

“It’s a freebie, it’s our money,” Taylor said Monday at a city council meeting. “Why do we need to add to our free money at the end of the year to reserves when we could have had zero taxation [increase]?”

City council has indicated that other than an increase in costs in protective services and money needed for the Bowen Road and Quarterway Bridge projects, tax rate increases could have been at zero per cent. Instead, Nanaimo property owners will see a 3.6-per cent tax rate increase.

“I think we need careful consideration or reconsideration when you’ve got excess money in hand and it’s more than able to reduce us to a zero taxation year,” said Taylor.

Nanaimo Mayor John Ruttan said the city budgets like any family might, keeping reserves on-hand in case of unexpected costs and to increase borrowing capabilities if required.

“If you don’t put aside reserves, if you don’t create funds that you can draw on on short notice, much like putting savings in a bank for a family, and an unexpected problem comes along that you haven’t anticipated, without reserves handily available you can have a financial crisis,” said Ruttan.

Nanaimo generally keeps about $90 million in reserves. One upcoming project that could require dipping into those funds is the new $15.7-million city hall annex.

“Mr. Taylor asks us the same question every year and at some level he has a point,” said Ruttan. “But it’s not like there is $2.7 million of taxpayers’ money sitting in a bank somewhere. It’s prudent to hold reserves where you can and quite often this is paper currency rather than hard currency.”

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