Kimberley City Council and staff are in the process of finalizing what Mayor Don McCormick calls the most difficult budget he’s ever worked on. Work has been underway on the budget for months and what it boils down to is that Kimberley taxpayers can expect a tax increase of about 5.5 per cent this year.
It’s the biggest increase taxpayers have seen in about seven years.
McCormick says that since 2014, Council has operated on trying to hold yearly property tax increases to the Municipal Rate of Inflation, which has been, on average, about two per cent per year.
But then came COVID.
“I hate to blame anything on COVID,” McCormick said. “But it’s impacted us in several ways. At the beginning of COVID in 2020 there was a lot of speculation on how it would affect our business community. Would businesses close?”
He says that council opted to hold the tax increase in 2020 to nothing to minimized the impact on the business community, which pays 2.5 times more property taxes than residential.
“In 2021, we were again trying to minimize impact and we kept the increase to 1.6 per cent. But inflation didn’t stop during those years, which means we fell behind from an operating budget point of view.
“We are paying the piper now.”
McCormick says that they are unable to use the $2 million plus in restart funds provided by the province to help with the operating budget. Those funds were for costs related to COVID.
“The two million from the government has helped us, but it can’t be used to put on the budget.”
He says inflation has consistently been about two per cent per year for the last seven years, although this year it is higher. The city chose to take an increase of 2.84 per cent. When you add that to the 2.5 per cent to catch up from the years of low or no increase, you get the 5.5 per cent.
Although inflation is up a lot, McCormick says it’s important to remember the the Consumer Price Index includes costs of groceries, which is driving a lot of the current inflation. That doesn’t really affect the city’s costs. The biggest factor for the city is energy costs — fuel, natural gas etc.
All projects planned for the coming year will be going ahead, he says, they are fully funded in the budget. The new waste water treatment plant will not affect the budget this year.
“The key is, we are still living in a world of uncertainty. We have no idea where inflation will go. We need to be nimble. This year we will certainly be able to operate within the financial plan. The next few years, we will have to revise it. There are so many uncontrollable and variables. Jim (Hendricks, City CFO) and his staff did an outstanding job of tip-toeing through the mine field.
READ: City of Kimberley looking at increase to variable tax rate beyond inflation
carolyn.grant@kimberleybulletin.com
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