Managing money

Tax increases are never pleasant and the increase of two per cent planned for this year will seem especially harsh.

Tax increases are never pleasant and the increase of two per cent planned for this year will seem especially harsh.

The proposed change is the same as last year’s increase in property taxes, but this year’s increase comes as the municipality has reduced its staff.

Earlier this month, the municipality cut its total staff by six positions in a move expected to save $487,000 this year and even more next year.

The savings from the staff reductions are significant and it would be easy to conclude that the taxpayers of Summerland should benefit from these measures with no increase in taxes this year or even a slight decrease. However, such a conclusion would be short sighted at best.

It is important to remember that the staff cuts were not made to provide a tax break but to bolster low reserve funds.

According to preliminary budget documents, more money will go to debt servicing and transfers to reserve funds than in previous years.

These measures will benefit the community in the long term, but they do not provide any immediate benefit to taxpayers.

All costs, including those for the operations of the municipality, tend to rise over time. An attempt to freeze the tax rate would eventually require the municipality to postpone necessary projects or maintenance expenses to keep the books balanced.

Eventually, the postponed expenses would need immediate attention and taxes would have to rise in order to pay for them. Annual increases around two per cent a year are much easier to absorb than double-digit increases after years without a change in the rates.

 

Tax increases become necessary in order to provide a consistent level of municipal services from one year to the next.