Over the last few years, Penticton residents have enjoyed something of a tax holiday.
No, we didn’t get to stop paying income tax, sales tax, or even property taxes, but the city did decide, starting in 2010, to hold the line and property taxes either weren’t changed, or only a small amount. In 2011, they even managed to lower taxes by half a per cent.
The holiday came to an end last week when Penticton city council gave the go ahead to a budget with a 5.5 per cent increase in the taxes required from the residents.
Like jumping off a cliff into Okanagan Lake on a hot summer day, not having any tax increases seemed like a good idea at the time. Lower taxes were seen as a way to spur economic growth and draw in more residents.
City staff and council have worked hard to make processes more efficient and lower the cost of government but, like the rocks underneath that tempting blue water, the bill has come due in the form of deferred work like road and facilities maintenance. That difference between the city’s spending and taxation has resulted in a structural deficit of $2.7 million.
There are only two ways to deal with a structural deficit: cut spending or increase taxes. Of the two, politicians usually prefer not to raise taxes, for some reason.
The hard reality is that spending has been cut about as much as it can be, and if Penticton continues to draw on reserve funds to balance the budget, those accounts will soon be empty. So council didn’t have much choice except to raise taxes, but even so, they should be applauded for facing reality and making the harder choice.
It’s a choice that, in the long run, will benefit the city more, in terms of being able to pay for needed new projects and ongoing work, than trying to keep taxes lower for a few more years.