Holding line on taxes carries cost in future

Penticton reserves being depleted by council's efforts to keep taxes in check

To paraphrase Ben Franklin, there are only two sure things in life, death and taxes. For the last few years though, Penticton has been fighting back against Ben’s decree and taken a holiday from an annual increase in the tax rate.

There are few people that will jump up to say they want to pay more taxes, but some councillors and community members have begun to question this strategy. If city council passes the 2013 budget as is, Penticton won’t have had a tax increases for three years now.

That sounds good, but it doesn’t mean costs here and around the world haven’t continued to rise. City staff have done a lot of work cutting costs and being more efficient, but even with that work Penticton is facing a $1.147 million deficit for the 2013 budget year. A tax increase of about 4.8 per cent would be needed to make up the shortfall, but the city plans to continue its tax holiday by drawing on Penticton’s reserve accounts to balance the books.

There are many good reasons for holding the line on taxes. It makes the city more attractive for people and businesses that want to relocate here, and we can use them — like other communities, Penticton’s economic growth has followed the world economy and slowed considerably over the last few years. And forcing the bureaucracy to make their department’s budgets go farther is a good thing as well; it’s what most of us are having to do with our personal budgets too.

But while Penticton’s reserves are healthy, there comes a time when they won’t be — in about 2015, if the chief financial officer’s projections are right. Then, we will be dealing with not only an unavoidable tax hike, but also not having sufficient reserves should there be a catastrophic problem.


While a tax hike now doesn’t mean that future deficits will be wiped out, a small tax increase would mean extending the life of city’s reserves significantly.