It’s election time again. As usual, many statements will be made by well-intentioned individuals and candidates about the terrible state of Penticton’s finances. Unfortunately, such comments often demonstrate an appalling lack of knowledge.
The overall city debt at the end 2010 stood at $80.6 million. No argument — a big figure. However, a look at the facts quickly puts this debt into context.
Within that figure is a remaining capital debt of $22 million for the South Okanagan Events Centre. General accounting practices dictate that amount must stay on the books, but it is not really a debt as it will be retired in 2018 from ongoing committed casino revenues. That amount has zero impact on city taxes.
There are those who argue that casino funding should not have been used. If council of the day had followed that advice, the events centre site today would be a vacant lot. To fund such a facility through conventional borrowing would have broken the back of Penticton taxpayers. Further, the events centre gained by referendum an approval rating of 80.3 per cent in September 2006. The use of casino funds was a landmark decision for the province of B.C. simply because no municipality had done it this way before. Once the $40 million agreement had been reached with the province, Penticton received many calls from municipal CEOs and financial officers enquiring: “How did you do that?” That use of casino funds has been reviewed and maintained by three successive councils.
Further to these figures, it should be understood that the overall debt figure includes $15.5 million for the sewage plant upgrade and $13.4 million for the water plant upgrade. Both were wise and very necessary environmental and capacity upgrades which speak to the health of our community. Both are funded by user fees which have no effect on general tax rates, just as natural gas and electricity have no such impact. Before anyone jumps up and yells at me that user fees are a form of taxation, my answer is: I know that — but they still have no impact on tax rates. Water and sewer services are absolutely essential and non-discretional services.
To gain further perspective, the current subsidy for the events centre operating costs is $1.66 million. Many who wave those costs about, either by design or ignorance, often fail to mention that a substantial portion of that bill goes to subsidize the operations of Memorial Arena and the convention centre. Prior to the events centre, their annual subsidy was $750,000. It should further be noted the current subsidy for the community centre, including the new pool, is $3 million — which begs the question, at least for me: Why are people not attacking the community centre with the same enthusiasm they show towards their favourite whipping boy the events centre?
When you factor in the above figures you will find by any measure that Penticton is in reasonable financial shape and not anywhere near the critical financial situation that some will have you believe. In fact, in the Statement of Financial Position to Dec. 31, 2010, the reserve fund stands at $12.1 million, up from $10.5 million in 2009.
Using the latest assessment figures for 2011, the average assessed value of a Penticton home is $346,420 and the average municipal tax was $1,334. That figure includes the school and hospital levies as well, levies over which the city has no control. So the average Penticton taxpayer pays $3.65 per day. That $3.65 gives you police and fire protection, roads, snow removal, library, recreation and convention facilities, a world-class events centre and the list goes on and on.
The truth is I pay more for my cable TV and Internet services than I pay for municipal taxes.
In sum, when one examines Penticton’s financial facts, one has to conclude that the city’s finances are in much better shape than some would have us believe. The weather may be overcast and cloudy but the sky is not falling!