Penticton cIty council has a deficit to deal with again this year, though it is a smaller figure than they had to balance last year.
According to chief financial officer Colin Fisher’s initial presentation at the budget discussions today, Penticton’s 2014 budget falls short by $979,000, opposed to to the $1.2 million shortfall last year.
A tax increase of about four per cent would be needed to balance the 2014 shortfall. but the preliminary budget is built on the basis of a zero per cent tax increase, though city council may yet decide to raise taxes.
According to Fisher, the general surplus reserve is projected to be just over $4 million at the end of 2013, shrinking to $3.114 million if the city chooses to draw on it to balance the budget.
“Seeing the status of the reserves and the size of the deficit at this point in time, my own first look at this is I would be very uncomfortable if we ended up having to raise taxes by more than one per cent,” said Coun. Wes Hopkin.
Coun John Vassilkaki wasn’t willing to commit to what might happen to the tax rate until council had gone through the entire budget, saying it was inappropriate to start making that kind of decision.
Litke, however, expressed concern about maintaining freeze on taxes.
“We see by 2016, our reserves are practically depleted, and then they go into negative numbers,” he said. Fisher confirmed that the city’s structural deficit hovers around $1 million every year and isn’t likely to disappear with current revenue and expenditure levels.
“Although your forecast indicates that we would use the reserves to balance our budget, in actual fact that is not a sustainable course of action,” said Litke.
Other budget highlights include a $130,000 increase in RCMP administration costs, a 4.6 per cent electric rate increase, and a water rate increase of five per cent. 2014 is also the final year for the $8 million portion of the South Okanagan Events Centre debt, which Fisher said is on schedule to be completely paid off in 2018.
“In the preliminary budget, after the staff vetting sessions were completed, we decreased the net deficit by $177,000. That may not seem a lot when you look at the overall size of the budget, but it speaks to the process that we undergo throughout the budgeting time period,” said Fisher. “In light of maintaining revenues at the same levels year after year, we have actually managed through the effort and head banging of staff, we’ve managed to reduce the budget year over year.”