Penticton has a lot of ground to make up after three years without a municipal tax increase.
The five-year financial plan introduced by chief financial officer Jim Bauer Tuesday not only includes a five per cent tax increase for 2017, but projects ongoing with four per cent increases from 2018 to 2021.
“Our tax revenue did not increase at the rate of inflation,” said Bauer, explaining how Penticton fell so far behind.
Five per cent in 2017 translates to an increase of about $105 to the average homeowner (based on a property value of about $369,000.) Businesses would see an increase of about $113 assuming council continues with their plan of reducing the business tax rate multiplier to 1.54 in 2017.
City revenues are budgeted at $74.9 million, a slight decrease of $369,000 from the 2016 forecast, but expenses are up by nearly $2.9 million.
The largest part of the expense increase, Bauer said, come from contractual labour increases and inflation. That accounts for $1.164 million, and proposed staffing increases account for another $463,000.
Human resources manager Gillian Kenney charted city hall staffing levels, which peaked at 300 full-time equivalents in 2008 dipping to less than 260 in 2010.
“This is when we implemented our core services review, where we laid off six per cent of our union staff and 30 per cent of our management,” said Kinney. “However, the work did not dissipate.”
Staffing levels have risen consistently since 2010 to 280. Kinney said they are proposing to add another four in 2017.
The engagement consultant, approved on a one-year contract last year, is included as a permanent position in 2017. New additions include a building inspector, a process improvement specialist for the finance department and a sustainability co-ordinator.
Kinney said the sustainability position is critical to reducing contamination in recycling and preserving $460,000 in grant funding.
The city is also having trouble filling available positions, according to Kinney.
“Our turnover rate is 13.5 per cent. The national rate is 11 per cent,” said Kinney. “There have been times where it has taken us over a year to hire certain positions.”
Some positions, she continued, were filled by re-hiring five retired staff members.
“We need to address our ability to access talent, our peak workloads and passing on institutional knowledge,” said Kinney.
Addressing Penticton’s infrastructure deficit also figures into the proposed tax hike with 2.1 per cent earmarked for dealing with the problem. That is just the start, with further 1.1 per cent increases planned each year until 2021.
“Replacement of aging infrastructure is something that is going to be with us forever,” said Mitch Moroziuk, director of operations. “We build new infrastructure, it ages, it deteriorates, and it has to be replaced. That cycle goes on and on.”
Spending on general capital projects is down in the 2017 budget more than half to $5.3 million, mainly due to the completion of the downtown revitalization project. But that number is expected to jump significantly in following years.
General capital spending is expected to be almost $16 million in 2018 and more than $19 million in 2019, approaching triple the 2017 budget request, which Bauer said relates to Memorial Arena.
The city and the arena task force are still gathering input on the public’s vision for the future of Memorial Arena, but according to Bauer, city staff have a particular future in mind.
“There is money that is budgeted in there assuming a replacement of Memorial Arena, and at this point in time we would assume there would be some borrowing associated with covering those costs,” said Bauer.