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2022 tax deferral looms over Penticton’s budget deliberations

Council is also weighing the hiring of 9 full-time positions
Penticton city council on day 1 of budget deliberations on Tuesday. City staff are proposing a 8.7 per cent property tax increase. (Brennan Phillips/Western News)

As deliberations for the City of Penticton’s 2024 budget got underway Tuesday morning, Nov. 21, questions continued to swirl over the impact of 2022’s tax deferral.

That deferral, which added up to a 10 per cent increase, was put off and set to be phased in over three years.

Penticton city staff told council as deliberations began that they went through the entire budget looking to save money in order to keep the tax increase as low as possible.

Staff said their cost-saving efforts allowed them to take on all the remaining deferred taxes in the 2024 budget.

Out of the proposed 8.7 per cent tax increase, three per cent of that is inflation and new spending, with the remaining 5.7 per cent accounting for the city’s 2022 deferral.

“We did a thorough review of the budget keeping the operations increase low,” said Angela Campbell, the city’s director of finance.

“We went through every single budget line and where we could incorporate inflation we did. We repurposed existing budget money to offset inflation.”

Campbell listed examples of cuts made to out-sourcing consulting and staff training.

Coun. Helena Konanz questioned the budget’s plans to bring on nine full-time equivalent positions, expressing her opposition for all of them except the proposed director of public safety position.

“Obviously these are very difficult times for people right now,” said Konanz. “I’ve never been involved in a budget where we hired that many all at once.”

Budgeting for a proposed project manager to take care of multiple upcoming initiatives – which would take the position in-house instead of hiring a consultant for each project – was quickly considered by councillors before being shunted to the wrap-up at the end of deliberations for a final decision.

Konanz also questioned the need to incorporate the entire deferral into 2024’s budget as soon as it was brought up in the overview of the budget on Nov. 21.

Staff responded by saying incorporating the deferral entirely into 2024’s budget gives the city a clean slate and flexibility when it comes to future budgets, and avoids the city from continuing to draw off its surplus and reserves to make up for the deferred taxes.

Having a clean slate is important when it comes to planned future projects such as a new community safety building, which would require the city to borrow the expected cost of $45 million. That borrowing would result in the city having to increase taxes to pay off the loan.

“That’s why staff really worked hard to bring that deferral in this year, so that council has the opportunity to look at those projects in the future without having a further tax increase that has to be incorporated,” said Campbell.

“At some point, the deferral has to be brought into the tax rate.”

Deliberations continue Wednesday, Nov. 22, with the remaining operating budget and on Thursday, Nov. 23, for the capital budget.

Brennan Phillips

About the Author: Brennan Phillips

Brennan was raised in the Okanagan and is thankful every day that he gets to live and work in one of the most beautiful places in Canada.
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