Municipality of Summerland. (Summerland Review file photo)

Municipality of Summerland. (Summerland Review file photo)

COLUMN: Careful planning involved in proposed municipal budget

Summerland mayor Toni Boot examines the municipal budget

On Jan. 13, after a full day presentation, questions and discussion, Summerland council approved a proposed 2021 property tax rate increase of 1.65 per cent.

Although council heard the final operational budget presentation on Jan. 13, its content was developed following many, many hours of discussions within the district’s management team: primarily departmental directors, their direct-report managers and the chief administrative officer.

The work of the management team began back in the summer of 2020 with a review of their respective departmental budget.

READ ALSO: Summerland taxes expected to rise by 1.65%

READ ALSO: Summerland staff reworks budget

Each department then developed a 2021 operational budget, which includes the expenses related to new projects and the 2021 completion of projects started in previous years, as well as existing and proposed new staff resources and any contractual obligations (negotiated pay increases, for example.)

In early fall 2020, director of finance David Svetlichny compiled the operational budgets of each department to get a baseline deficit figure.

At that time, this figure was $1.4 million – which would equate to almost a 15.25 per cent tax rate increase. (Based on 2021 B.C. Assessment Authority data, a one per cent increase in Summerland property tax rate results in taxation revenue of $91,895.)

Svetlichny and the administrator had several meetings with each departmental management team to further review their piece of the overall operational budget. The objective of these meetings was to find operational savings, confirm priority work and remove items that could be deferred to future budgets.

Following the meetings with individual departments, the entire senior management team, collectively, reviewed the operational budget looking for efficiencies between departments.

They also looked at the proposed new projects, including new staff hires, to determine which of these were best to bring forward as organizational priorities.

By mid-October 2020, the operational budget deficit had been pared down to $356,633.

A Committee of the Whole meeting was held Oct. 28 to reaffirm council priorities, and to provide preliminary information on the budget pressures.

Following council discussion, the administrator confirmed that directors would incorporate the direction from the council discussions into operational budgets for presentation in January 2021.

One week later, council learned that $2.724 million in COVID-19 Safe Restart Grant funding was coming from the province.

The director of finance advised that he expected the pandemic would affect district budgets into 2023 and that we should consider cautious allocation of the grant funding (within the eligibility guidelines) and not use it all in 2021.

Council accepted the director of finance’s recommendation and requested a two-pronged approach be used in allocating this unexpected funding: Historical Recapture and Forward Thinking.

Historical Recapture (recouping amounts already spent in 2020) and Forward Thinking (allocating funding based on anticipated future pressures, such as increased costs).

At the Jan. 13 meeting staff presented an operational budget showing a deficit of $149,041 – less than 10 per cent of the original $1.4 million deficit – and a 1.65 per cent tax rate increase to cover the substantial reduction in the deficit.

In addition to the significant efforts of staff and council to reduce the potential tax increase, this relatively low rate can be attributed to two main factors: The COVID-19 Safe Restart funds and the new construction revenue, both of which are allocated to the general fund (which, in turn, funds the operational budget).

A total of $1,436,239 of eligible allocations are covered by the Restart Grant, as follows:

• Historical Recapture Approach

• 2020 Operational Fund $891,788

• Forward Thinking Approach

• 2021 Operational Fund $309,451 2021 Capital Fund $235,000

Without the restart grant, the district of Summerland would be facing an extremely challenging fiscal situation well beyond the 2021 fiscal year. While vaccinations have begun in B.C., as mentioned previously it will be some time before pre-COVID revenue levels return. Therefore, Council has chosen to leave $1,287,761 of the grant unallocated at this time.

Although not nearly as substantial as the Safe Restart Grant dollars, the District logged an additional $132,500 in new construction revenue in 2021. This amount, equivalent to a 1.44 per cent tax increase, is additional taxation revenue generated from new construction in the prior year.

What does this all mean to Summerland residential property owners?

The combined utility rate increases approved in December 2020 and the proposed property tax increase of 1.65 per cent results in an additional $13.22 monthly charge ($154 annually.) These increases are based on BC Assessment Authority’s 2021 average Summerland house value of $591,790.

Toni Boot is the mayor of Summerland.

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ColumnistMunicipal Government