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New West council gets look at what 3.9%, 4.6% and 6.1% property tax increases mean to city

No decision has been made on 2022 tax hikes
City hall2 - Nov. 2021 - JG
City of New Westminster staff and council continue to work away on the 2022 budget.

New Westminster residents and businesses will have a better sense of the tax hike they could face in 2022 after council considers some proposed service enhancements.

At a Nov. 1 workshop, staff presented council with information about the increases proposed for the city’s utilities, as well as some potential “scenarios” for the 2022 property tax increase.

Harji Varn, the city’s director of finance, said a “blended” increase of 5.3% is proposed for the city’s utility rates.

“From our 2021 current average rate, it will be increasing by about $179,” she said.

For 2022, the city is proposing increases to the electrical utility rate of 2.8% and to the water and sewer utility rates of 7% each, all of which are consistent with the previously approved five-year plan. The 14.5% increase being proposed for the solid waste utility is higher than the 10% increase envisioned in the five-year plan.

“At that time we did not have the mandate to move forward with the new recycling glass collection,” Varn said. “The glass collection is the driver for the 2022 rate change. That is about $12 per household, on average, for the whole year, so about $1 a month for a multifamily. The investment upfront includes $425,000 for a special vehicle and proving glass recycling bins to residents so they can get the door-to-door collection that’s required to achieve those reduced contamination goals.”

Tax rate to be determined

According to a report to council, existing property taxes are $93.7 million and fixed cost and salary increases are $2.9 million (or about a 3% increase). The city is also facing an increase to its insurance premiums of about $1.5 million (or about 1.6%).

Varn noted the city collected $144.7 million through property taxes in 2021, which included $93.7 million for the city and an additional $51 million on behalf of other tax authorities, such as Metro Vancouver, TransLink and schools.

“So, a key message here: not the entire tax bill is in the city’s control,” she said.

At the recent workshop, staff didn’t present council with a proposed property tax increase for 2022. Instead, staff put forward three budget scenarios that council could mull over before the next workshop – options that outline what the city could provide with 3.9%, 4.6% and 6.1% property tax increases.

According to Varn, a 3.9% tax increase would cover the city’s fixed costs of 3% and insurance costs of 1.6% but the city would need to reduce spending by .7%, which would be “very challenging” to do.

“A 4.6% tax increase will allow us to keep going with the fixed costs and insurance, but it won’t allow us to have any net new permanent service enhancements for 2022,” she said. “And 6.1% will keep the fixed costs and the insurance at 4.6% but it will add in the growth of the service enhancements that are proposed.”

A list of proposed service enhancements, which add up to a 1.5% tax increase, includes a variety of initiatives including a beat person for greenways and commercial areas (engineering), an irrigation technician  to help with climate change resilience  and a natural areas practitioner (parks and rec), an Indigenous relations advisor (Anvil Centre) and increased E-COMM costs (New Westminster Police Department.)

Lisa Spitale, the city’s chief administrative officer, said the enhancement will be discussed at a Nov. 29 budget workshop.

Council input

Coun. Mary Trentadue said she wants to discuss the enhancements and other refinements to the budget before saying what she’s comfortable with in terms of a tax increase.

“I am not off the wall on any of these,” she said of the three scenarios. “I think that all of these would be reasonable, but I am not ready at this point to say which one is where I’d like to stick a pin in because I feel like there is more conversation to be had.”

Similarly, Coun. Patrick Johnstone said he was going to hedge his bets on the tax increases until council goes through the proposed enhancements.

“I’m in the middle,” Coun. Chuck Puchmayr said of the proposed budget scenarios. “I want to see a tax increase of certainly of under 6%, so what we need to get there is where I want to go.”

Mayor Jonathan Cote said insurance premiums are a new cost driver in the budget and are putting a “huge pressure” on the city. He said the proposed enhancements aren’t a surprise, as they’re very much connected to the work the city has been dong and engaging in.

“I do have concerns of looking at a budget of over a 6% tax increase for property taxes,” he said. “That is obviously higher than the average number. That does raise some concerns for myself, particularly in the time that we are having. We are still working through COVID, particularly knowing how that will impact small businesses in the community and residents alike.”

Cote said a lot of government agencies are experiencing financial pressures, including the federal government, the provincial government, TransLink and Metro Vancouver. While he considers the middle option to be “something doable” because it takes into account the cost pressures faced by the city, he hoped there would be a way to incorporate or phase in the enhancements.

“I think we do kind of need to get into that 4% range for us to get to an area, at least from my perspective, that would be a comfortable level given some of the pressures out there,” he said. “I think there are probably some ways that we can look at that. I hope staff can do some further work as we get to the future workshops on the budget.”

During the two-hour workshop, staff gave council an overview of some of the initiatives undertaken by the city in 2021 and a look at initiatives being contemplated for next year.

Trentadue thanked staff for highlighting some of the city’s 2021 accomplishments.

“This year, to see all of the actions that the city has taken in the past year, during COVID, through COVID, is really quite astounding. I think we should be very proud of the actions and the projects and the work, all of the challenges that we have undergone and still done really brilliant work,” she said. “I want to thank staff for getting us through that and doing amazing work at the same time.”