Fort St. John council rejects tax hike to make up budget shortfall

Fort St. John will dip into its tax stabilization reserve and boost its investment expectations this year to offset a late and unexpected $601,000 shortfall in its operating budget.

Council unanimously rejected a proposal to increase tax rates to make up the difference, calling its move a compromise as it gears up for a major financial policy review later this year.

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“The years of financial stewardship we have put into this community over the years has created the options we have in front of us,” Mayor Lori Ackerman said. “Without that diligence … we would not have these options.”

The city was caught off guard after a surge in property assessment appeals cut more than $37 million from the city’s overall assessment portfolio, most of it for business properties. David Joy, the city’s budget architect, is still unsure why there was such a dramatic drop, but said it’s something he'll be investigating with BC Assessment.

The city had $3 million in its tax stabilization reserve and will draw on $251,500. It will also boost its investment projections by $350,000 after it saw expectations double to $1.7 million in 2018.

“The budget we set comes with a lot of planning and forethought and care by our staff, and we appreciate that and I really commend our staff in putting that kind of work in to presenting a budget,” said Coun. Gord Klassen, who motioned to draw on the reserves instead of increase tax rates.

“BC Assessment has created our angst. To have that sudden change, it creates quite an impact for us in our planning and budgeting and taxation.”

The city's revenues for its operating budget are made up of property taxes, grants, the sale of services, investments, and other transfers.

City administration has cut $1 million over the last two years, Joy noted, and will continue to look for savings and other efficiencies. Cancelling capital projects — financed by grants from the province through the Peace River Agreement — would have no affect on tax rates, Joy said.

While the appeals have created a challenge for the city this year, property owners should take note, Joy added.

“Any property owners should be heartened by fact the BC assessment will listen and reflect on appeals,” he said.

“You can’t just appeal. You have to provide some supporting documentation, some thought as to why you should have a lower assessment.”

Coun. Tony Zabinsky believes there will be headwinds and further appeals ahead for the city now that business owners are aware many of their peers have realized savings.

“Businesses talk to businesses,” Zabinsky said. "I think next year we’re going to see a drop. We need to be prepared for this. This is just the tip of the iceberg.”

Council will be reviewing all aspects of the city's financial policy framework later this year, including tax rates, exemptions, account reserves, and more.

Email Managing Editor Matt Preprost at editor@ahnfsj.ca. 

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