PUBLIC participation came up somewhat short in a budget session hosted Jan. 21 by the City of Terrace.
In a room set for more than 50 people at Terrace’s Sportsplex, three people came to question council about 2013 draft budget matters and to respond to three questions asked by the city.
Although the auditorium was mostly empty, it’s not too late for residents, said the city’s finance director Ron Bowles. The budget won’t be finalized until February—and there’s a few key matters on the table.
“They will have more debate sessions,” said Bowles, pointing to council’s upcoming meetings for draft budget tweaks.
Two out of three questions asked by council to auditorium members were to collect information for these sessions, noted Bowles.
The first, “should business taxes be lowered and residential taxes increased?” was asked by councillor Bruce Bidgood at the meeting. “Should council consider charging more taxes to residents and less to businesses to reflect the increasing value of homes?”
Bidgood said that business and residential tax proportions have remained relatively stable but that recently the values of residential properties have been increasing at a disproportionate rate.
As of July 2008, the average assessed value of a single family dwelling in Terrace, according to B.C. assessment, was $189,280. Now, the average value is $220,669—based on assessments made in July 2012. That marks a 16.6 per cent increase.
The average commercial property value picture over the same amount of time tells a different story.
As of July 2008, that value was $497,133—which increased over the next two years, peaking at $514,214 in July of 2010. This year’s average assessment values clocked in below the 2008 level, however, at $335 dollars less.
Historically, commercial businesses have paid more per $1000 dollars of assessed value than residential on the premise that businesses make an income using their properties.
Last year’s ratio was $4.2 dollars on every $1000 of commercial property value compared to $1 of residential tax paid per $1000 of value.
The weight of the city’s tax burden is carried primarily by residential and commercial taxpayers as Terrace lacks an industrial tax base to share the burden.
Maatje Stamp-Vincent, who attended the budget presentation, doesn’t agree with the way the city is distributing its tax burden.
But, she says its more complex than simply, “should residents pay more and businesses pay less?”
“An appropriate question for council to ask should be framed in terms of what is a fair distribution of the municipal tax burden between the tax rate classes,” she said. “How can we grow the tax pie to ensure that local small business property owners are not faced with year over year increases to their portion of municipal revenue in order for council to keep residential tax rates low?
“Residents ask for and appreciate more services such as a water slide in the swimming pool or recycling services. So, who should pay for increased and/or improved residential services?”
But there are a few key reasons why commercial is taxed more than residential, explains Bowles.
“It’s apples and oranges,” he said.
First, commercial properties have an ability to generate income by using their property.
Next, residents don’t have the ability to make more money just because their assessments have gone up and asking a resident to sell their home and then move elsewhere in order to afford to pay isn’t right, he said.
Generally speaking, if commercial assessments go up its a larger indicator of affordability.
Also, businesses are employers of employees which use residential services, added Bowles.
The next question was whether or not the downtown tax revitalization bylaw should be renewed.
The program enables building and property owners within the downtown business improvement area to build, renovate or upgrade but have municipal taxes frozen at the property’s value prior to improvements for a five-year term.
As the bylaw is set to expire soon, having started in 2009, the city wants to gather opinion about whether or not to continue offering such an incentive for improvements to the downtown core.
“Evidenced by many new developments, the performance of the program appears to be highly successful. The city is equally aware that some of these upgrades may have happened without this … tax incentive,” said councillor Stacey Tyers.
As an example, in 2010, the program tax impact meaning taxes not collected on rising values by the city was equal to $30,000.
The city’s finance director Ron Bowles said the program’s total cost to the city is hard to tally.
“This information … is not readily available,” said Bowles, adding it will be available at a meeting this spring or summer.
A third question was asked to residents at the meeting.
“In developing our communications plan, many communication avenues were presented including websites, news releases, mail-outs, annual report, social media, open houses, advertising, talk-back line, one-on one, surveys, meetings, etc. How do you want to be communicated with regarding management of the city’s business?”
Bowles said public responses are always welcome.