Penticton residents will have to wait a until January to find out how big a tax increase they are facing in 2016.
City council wrapped up their budget deliberations Monday with the hike hovering between 4.7 and 5.8 per cent. The final amount will depend on possible revenue increases suggested by staff, which could see hikes to building permits, business licenses, parking and recreation fees.
Mayor Andrew Jakubeit said he thought the suggested increases should be examined by council before a final decision was made. That will happen at the first regular council meeting of 2016, on Jan. 11, when city staff will make a presentation on the suggest increases.
“Hopefully get it to the five per cent range. I am not sure we will agree to the full $265,000 that staff identified as potential revenue sources,” said Jakubeit, who felt the increases were a good suggestion.
“We always focus on cutting and never where we can grow revenue,” he said.
City council spent their day Monday trying to find more cuts to the city’s operating budget and evaluating grant requests.
Cuts proved hard to find, like a suggestion that money could be saved by reducing the number of flower baskets that line city streets in the summer, or downgrading services to Three Mile Beach, which met with strong resistance from Coun. Judy Sentes.
“I don’t have any appetite for any of the suggestions you have brought forward,“ said Sentes. “For the general appearance of my community, I do not see this as cost savings.”
“I think we exhausted most of our cuts. No one really wanted to revisit or circle anything back on the cuts we made before,” said Jakubeit.
At the end of the day, council reduced the operating budget deficit to about $1.25 million if the suggested revenues increases were approved, or $1.51 million if they weren’t.
For an average home with a value of $325,000, it equates to 81 dollars for the year if the increase is set at 5.8 per cent, and $67 per year if it is at 4.78.
“Somewhere between $65 and $80 is what the average homeowner is going to be looking at and we will try to finalize that at the first meeting in January,” said Jakubeit. During the discussion he said he wanted to be sure there weren’t any rocks council didn’t turn over.
“Looking forward I think it is prudent that we recognize there has to be an increase,” said Sentes, who reiterated city manager Eric Sorenson’s assertion that Penticton would need two years of large tax increases to deal with a $2.7 million structural deficit.
“We are just cleaning up the state of affairs that was left behind,” said Coun. Tarik Sayeed, who was participating by teleconference.
Sayeed blamed past councils, and particularly former mayor, now MLA, Dan Ashton, for not increasing taxes incrementally in relation to inflation. He refereed to that as “Finance 101” and suggested that the lack of increases in the tax rate from 2011 to 2013 was instead “Politics 101.”
Sayeed’s remarks were immediately condemned by Coun. Andre Martin, and Jakubeit said he was disappointed by the comments, describing them as unfair.
“Last year the tax increase we approved was slightly below inflation. You could make the argument he (Sayeed) was part of that as well,” said Jakubeit.
Jakubeit said those previous city councils, which he was a part of, were looking at Penticton as coming out of a recession and was trying to minimize those effects in hopes that in subsequent years, there would be growth in revenue and population.
“That growth hasn’t materialized, it’s still under one per cent and inflation is closer to two per cent,” said Jakubeit.