Nanaimo city council has rejected a tax hike to address significant road repair, snow and ice costs caused by this winter’s severe weather.
Nanaimo councillors were unanimous about keeping this year’s property tax increase at 1.5 per cent during last week’s finance and audit committee meeting. It means costs will be pulled from reserves and a new debt stabilization fund will be delayed by one year.
The City of Nanaimo previously announced in a press release a projected property tax hike for this year would increase from 1.5 per cent to 2.3 per cent due to severe weather this past winter. Nanaimo had budgeted $512,000 for snow and ice removal, but has spent more than $1 million. It projects to spend approximately $400,000 between October and December this year, said Victor Mema, chief financial officer, adding it depletes reserves.
The city also faces a road repair budget that’s increased $288,000, a city report shows.
City council members considered potential solutions to avoid a further tax hike, such as using general reserves or delaying a debt stabilization reserve proposed by Mema.
The reserve would see deposits when interest rates for debt are reduced and could be pulled from when interest rates increase instead of the city having to tax. This year, for example, the city’s debt servicing cost for the conference centre was reduced by $637,000 annually.
According to Mema, the city hopes, as a strategy, that when the city pays off debt, like Nanaimo Aquatic Centre in 2020, the money that would continue to be collected from taxes, but would be put into the reserve.
“So that at any point when you decide that you want to go and borrow, the amount that you borrow becomes less because you are now putting money aside,” Mema said to council.
Coun. Jerry Hong asked why the money from the conference centre couldn’t go to the snow removal budget and start the reserve in 2018 and he wanted public roads to find the money to fix roads, reluctant to give them the additional dollars.
McKay, who left before a vote, said this council and administration told the community $80 million could be borrowed with no tax increase.
“We have a bad winter, we go over budget on snow removal, we got some broken-up roads … and the community is now being told because of this minor little expense of $180-million budget that we’re going to see a 0.8-per cent tax increase. I just say find the money,” he said. “Surely if we believe that there will be no tax increase with $80-million borrowing, then we should be able to figure out where to get $800,000 from on a one-time.”
Mema said the mayor’s comments could not stand that if the city was going to fund $80 million and there was no tax increase, “well there must be money somewhere. That’s not correct.”
The five-year financial plan bylaw amendment and the 2017 property tax rate bylaw will go to council on April 24.