Budget Talks

So this week council will endorse and adopt our 2016 budget and it comes with a 5.5% tax increase. No one likes having to pay taxes or any increases, but over the past 5 years Penticton tax payers have only had a 0.56% increase.

I met with two local residents concerned about the budget process and more importantly providing more information regarding what residents pay compared to business. The City website has a vast amount of information on it, but sometimes it is difficult to navigate or find the relevant information. With respect to the budget, once you found it, it had the original presentation to council in December but was never amended to show the progress during budget deliberations. Moving forward the budget process and information online will improve.

Our budget is over $100 Million so it is large, and yet we only had a small handful of residents requesting consideration for different initiatives or higher priorities placed on a project or department. Did you know that 8 cents of every tax dollar goes to your local municipality…the rest go to federal and provincial governments.  One of the great things about being a local politician is that you get to see the changes you endorse. Penticton creek rehabilitation, downtown revitalization, or local non-profits given grants to support the community; they were all part of the budget process.

I was asked why focus on creating a welcoming environment for business on the backs of the residential taxpayer. In particular was the tax rate multiplier (difference between what business pays compared to residential taxpayers). We reviewed the past 18 years which had the rate at 1.5 in 1998 until 2005 when it climbed to 1.85 and peaked at 2.07 in 2009. In 2015 it was 1.62 and 2016 is supposed to be 1.58 (council will review in April). So what do all these numbers mean? For every dollar in tax a resident pays a business pays 1.62 more. In 2014 the business rate was 1.65 and shifting the tax rate multiplier to 1.62 for 2015 meant the average residential tax payer paid $8 more and the average business paid $104 less. To confuse you more over the past 18 years the changes in the tax rate multiplier has netted a $6.01 increase that residents have paid more.

I was asked about Economic Investment Zones and why give away tax money. To be clear there is no giving away of something if we never had in the first place. The entire purpose of the EIZ was to create a new development, and tax exemptions are on the improvements or new development. If the EIZ prompts a multi-million dollar investment which creates jobs and increases our tax base, the offset of postponing the collection of taxes will still yield a return on the investment for the greater community and eventually city coffers. If you argue the project would have been built eventually…waiting multiple years for that to happen could have an adverse effect on our local economy, and growing our population numbers. Our EIZ’s are targeted for the downtown and industrial area. While you may have philosophical differences of opinions regarding Economic Incentive Zones, what we don’t have is a good summary of the progress, exemptions granted, and economic impact to help validate assumptions and assertions. We will endeavour to provide that information as part of our 2015 annual report.

According to BC stats Penticton’s population, in 2015, decreased by 200 people. That impacts the tax burden, and is why we need residential growth and need to create incentives to help grow our economy and tax base.

Council and city staff work hard to find a balance to support growth, business, and provide services that the community expects. Each resident has different needs, requests and desires that they would like to see for or in our community.  The bigger question is how we engage with the community to get better information about the city budget to citizens.