Kimberley city council deliberated operating budget changes for the 2022-2026 financial plan at a special meeting on Monday, Dec. 6 and it is likely that the city is looking at an increase to the variable tax rate beyond inflation this year.
The variable tax rate increase has been held at around two per cent for the past six years, which is the City of Kimberley’s municipal rate of inflation.
“Costs are going up and we have to keep up with inflation, because if we don’t, that lack of new revenue means we eventually need to reduce service levels,” said Mayor Don McCormick. “Nobody wants to see that happen, so at a minimum each year we need to be able to account for inflation.”
When the COVID-19 pandemic hit two years ago, council made the decision to do a zero per cent increase. Not knowing then how the pandemic would unfold, they wanted to send a message to the community that their City was with them through those difficult times.
Last year, they did a 1.6 per cent increase, which again was below the inflation rate. That means that over the past two years, nearly five per cent of the variable tax revenue has been lost to inflation.
McCormick said that while two per cent may not seem like a lot, it adds up quickly if not taken in the year when it was needed. And it’s been compounded due to the fact that the community is growing, so to keep up with service levels, the city has added some expense in the form of staff support.
Currently the city is looking at a preliminary, though not yet finalized, 4.7 per cent property tax increase for 2022, essentially the lost inflationary increase from the previous two years. That increase is subject to change based on several variables.
“It looks difficult in relation to what we’ve been able to achieve the last six years, but it’s in line with other communities in the Kootenay region,” McCormick said. “All in all I’m extremely pleased with our financial management and the constraint that staff have brought to the table with respect to asks for 2022.
“The focus is on projects that are important to our neighbourhoods and to the community.”
One of the variables that could impact that figure is the RCMP contract increase, as it is currently unknown what the full impact on city finances will be.
The city will also get an insurance premium increase this year, due to the various natural disasters that have occurred in the province over the past few years.
The other variable is based on inflationary increases that are currently occurring. The municipal rate of inflation has held at two per cent for years.
“While we have a slightly different basket of goods, the four-plus percent inflation for consumer goods is a bit scary,” McCormick explained. “There are some things like gasoline and hydro that are common, but we don’t know what the municipal impact is going to be.”
The city now has this preliminary figure and are looking at ways to minimize it as much as they can without reducing services, an option that, while always on the table, is not a good option for Kimberley.
“I think service reductions are for communities that typically are moving backwards,” he said. “Kimberley is not one of those communities and so we have to figure out a way to minimize the increases and continue to maximize the service delivery for our residents.”