A sharp-eyed, or perhaps sharp-eared, Pentictonite caught council in a mistake that may force a special meeting to get the 2013 budget approved in time.
When changes to the ratio between residential and commercial property taxes were mentioned at the April 15 council meeting, council-watcher Ted Wiltse became concerned, both over the tax shift and the fact that he hadn’t heard the proposed tax change voted on.
“It turns out he was right. Council forgot to bring the matter forward for debate and a vote,” said acting mayor Garry Litke. “We have not been able to find any minutes that show that an actual vote was taken.”
In 2005, with market values of residential properties skyrocketing, the council of the day voted to balance the tax burden by increasing the multiple used to calculate commercial property taxes. Chief financial officer Doug Leahy suggested a five-year phased plan to lower the multiple slowly from 1.76 to 1.5.
Litke said staff undertook a thorough search of council minutes and other records. While there was discussion about the change, nothing was done about it. Contrary to Wiltse’s concerns, there wasn’t an illegal vote about it in-camera, according to Litke.
“The financial review advisory committee made a recommendation to council and council considered the recommendation in a closed session,” said Leahy. “They didn’t make a decision, because out of that meeting it was supposed to come to the next council meeting to deal with that resolution.”
“The fact is it wasn’t done, period. It wasn’t done anywhere. Neither in-camera or in open,” said Litke. “It became a part of our budget discussion, but there wasn’t a resolution put on the floor that was debated and voted on. There was an assumption made that council was agreeable and it became part of the budget.”
During the budget discussions, according to Litke, it is common for significant financial decisions to be made as part of the budget adoption process.
“This, however, should have gone to a separate resolution. It should have been debated in public, it wasn’t. It wasn’t decided in-camera illegally either,” said Litke. “It was an oversight, a procedural error. There wasn’t any motion put on the floor, either in-camera or in the open.”
That oversight will be corrected at the May 6 regular council meeting, where Leahy will present a report and council will give it the debate it missed the first time around.
If council approves the plan to phase in the tax shift, they will have to rescind the third reading the budget has already been given. After being amended, it will have to be given third reading again, and a special council meeting will be called to pass the budget.
“It has to be done before May 15, at a special council meeting where we have to adopt the budget,” said Litke. “That decision needs to be made in public, it is an item that affects all the taxpayers, residential and commercial. It is not a decision that should be made in camera, nor was it.”
Though it won’t generate any increase in the overall taxes collected in the city, lowering the multiple used to calculate commercial property taxes will have the effect of increasing residential taxes.
“What we are trying to do is apportion commercial to be, at the end of five years, 1.5 times as much as a residential home,” said Leahy. “There is no new revenue, it is just a shift between the classes.”
Penticton homeowners can expect an average tax increase of $10 per year over the course of the five-year plan.