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‘Conspiracy of events’ could mean tax increases

Council calls on community for feedback on preliminary 2008 budget
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Budget Woes Rising construction costs, such as the cost of completing the library, are one of the reasons that Council is considering a tax increase for next year. Photo by Maureen Provencal.

If council continues with business as usual next year, Whistler residents would see a 14.5 per cent increase in property taxes.

But it doesn’t want to do that.

That’s why staff is considering implementing several cost cutting measures to reduce the tax impact to property owners. Even with those cost cutting measures, however, council is still faced with an 8.5 per cent tax increase.

It is now looking at ways to reduce that even further and wants to hear from the community on how to go about doing that.

“Clearly council is saying the projected tax increases are not acceptable,” said Mayor Ken Melamed, as staff updated council on the 2008 budget process Monday.

An 8.5 per cent tax increase would translate to a $126 increase on a tax bill for a residential property assessed at $750,000. The total municipal portion of the tax bill for that property would come in at $1,612.

Likewise, a commercial property assessed at $429,500 would see its taxes go up by $235 for a total municipal tax bill of $3,009.

All taxes by other agencies, like provincial school taxes, are not determined until the spring.

Lisa Landry, the municipality’s manager of fiscal planning, outlined three specific factors that have caused the pressures on the 2008 budget.

The biggest hit has come from the provincial government’s change to the Class 1/6 strata hotel classification. After several years of uncertainty, the province handed down its decision in the spring, which essentially allows some strata hotels to pay less in taxes.

“Now we know what’s happening,” said Councillor Bob Lorriman, referring to the years of uncertainty. “It’s probably the worst case scenario.”

Though the final numbers won’t be in until later this year staff estimate the loss to be in the range of $1.8 million to $2.5 million, or roughly seven to 10 per cent of the municipality’s total tax revenue.

Compounding this hit are rising labour costs. Wage increases have outpaced general inflation rates recently and as more people begin to leave the workforce than enter it, that trend is not likely to reverse any time soon.

Staff has estimated a $1 million impact to the municipal budget for labour cost increases.

The third major issue playing a role in the 2008 budget is the change in operations for Whistler’s utilities, specifically the new waste transfer station and the new composting facility. Staff anticipates the nature and costs associated with these new facilities will lead to increases in operating costs.

“Underpinning all of this is a maturation of our community,” explained Landry.

That means fewer buildings are being built, which means a more stable tax base, as Whistler reaches build out.

Melamed called the factors affecting the 2008 budget a “conspiracy of events” which is happening despite an additional $6 million annually in hotel tax revenue granted this year from the provincial government.

“Thank goodness we got the $6 million in additional revenue this year,” said the mayor.

Staff’s options to reduce the impact to taxpayers range from cutting the capital program and scrapping any supplemental requests to capping department budgets at the 2007 level and therefore not increasing with inflation, as is the general rule of thumb. That means staff will have to deliver the same level of service, or higher, without additional funds.

Also under consideration is a $1 million reduction going in to capital reserves, which fund capital projects. The municipality aims to contribute 20 per cent of its budget to reserves annually. However, the contributions have generally been in the range of 18 per cent. This proposal will lower that even further to roughly 13.6 per cent.

“We can only do that for so long,” said the mayor.

The budget crunch comes at a time when Whistler is expected to continue one of the busiest capital spending programs in recent history. This year more than $26 million was budgeted for capital spending. The current Five Year Financial Plan shows a capital spending program of $20 million in 2008 as Whistler prepares for the 2010 Winter Games.

The municipal reserves, or its savings program, are already seeing declining numbers without this new hit.

The current plan shows $17 million in reserves in 2007. That drops to $9.6 million next year and climbs to $11.8 million by 2011.

In addition, council approved more than $400,000 in supplemental requests this year for things like municipal training and development ($28,000), library operations ($151,000) and several minor park projects totaling roughly $20,000.

Staff is proposing there be no budget for supplemental requests in 2008, save those already approved in the current budget.

Council wants to hear from the community on what it should do to tackle these budgetary issues.

“It’s your money,” said Lorriman. “We want your input but it needs to be informed input.”

He encouraged everyone to read the current budget online at www.whistler.ca .

Council’s Dialogue Café on the budget is scheduled for Friday, Nov. 16 from 7 to 9 p.m. at the GLC.