Six per cent levy could be added this year and will generate $2.5 million more in tax revenue in five years
Council proposing to move forward with Capital Project Levy
Swift Current City Council is proposing a new Capital Reserve Levy, with a series of six per cent increases proposed over a five year period in order to help the city generate funds for future capital expenditures.
Council passed a Notice of Motion at a special City Council meeting on Wednesday night proposing a Capital Reserve Bylaw be approved as a new funding model in an attempt to eliminate the current tax breaks afforded by utilizing subsidies from the Light and Power surplus.
The proposal calls for an initial six per cent base increase, followed each year by six per cent increases which will generate $2.5 million more in tax revenue at the end of five years.
"It's difficult. We're certainly mindful of not only what our residents see, but what hits their pocketbook. But the reality of it is we've got to play catch up for a long time. Tax minimization as a strategy has put us behind the eight ball," Mayor Jerrod Schafer said following the Feb. 5 special council meeting.
By generating additional tax revenue this new financial strategy will allow the city to reduce their reliance on debt to pay for capital expenditures. It will also allow the Light and Power surplus to be directed to other priorities instead of simply as a revenue stream to fund general operations and subsidize property taxes.
"This isn't an increase that you can just jam down in a year or that would be pretty significant. So we're phasing it in over a period of time. But the reality of it is is what we're trying to do is get our tax strategy away from being so highly subsidized," Schafer said.
"We need to get to a situation where our Light and Power dividend pays for capital in this community, and the taxes that we pay simply pay for the services that we expect on a daily basis," he added.
City Council first proposed a change to their financial strategy back in December, with the community weighing in on the proposal to council members.
"I think everybody understands out situation. The discussion has been good to sort of enlighten everybody into the financial situation in Swift Current and how our community operates, and probably what we need to do obviously moving forward to be in a good situation," Schafer said.
"We have no doubt that there's some people that are going to be dead against something like this, because some individuals don't want to pay for anything that they don't use. They don't want to contribute to an iPlex or to an aquatic facility because they don't use them. But that's not the business that we're in. We have to look after an entire community."
Schafer again highlighted that the majority of the current city debt has helped provide some important community improvements.
"I know $73 million of debt is a big number for folks. And sometimes I think that's probably the hardest part to wrap our heads around. But the reality of it is, what I'm interested in hearing and it gives people the opportunity for hindsight, is what are the items that folks think that we shouldn't have gone through with?"
"Our debt, as I've often said, about $60 million of it is for property development, it's for our iPlex and Fairview Arenas, it's for landfills, it's for water, it's for wastewater, and it's for a hospital. So those are pretty significant items, and our community would look very different if you didn't have those items. That's where the bulk of our debt is."
"That's kind of the challenge that I put out is when folks are going to say that we shouldn't have the level of debt that we have, or they're concerned with our spending. What of those big ticket items that they would recommend us not having? Because those are the ones that really impact our financial picture the most."
Schafer highlighted that municipal governments face different budgeting challenges than other levels of government, which requires them to be more transparent with their decisions.
"It's a huge challenge that all municipal governments are facing because our revenues don't grow with the economy like they do at other levels. And we don't have the ability to run deficits like the federal government has for the last number of years. I think the reality of it is is we have to ask for tax increases, and I think sometimes the percentage numbers are quite shocking. But it's looking at the real dollars that we're mindful of, and how it's going to impact our residents. We think this increase, although nobody likes the sound of it, we think we're trying to do all we can to keep it reasonable on a per house basis when you break down the actual costs."
"Nobody likes to talk tax increases. As I said, this council wishes we were in a different position where this isn't a challenge that we had to face. But fortunately our tax structure in this city is that our taxes are very affordable compared to any other community in Saskatchewan by a large margin."
The Mayor also pointed out that all line items in this year's budget are being watched closely for cost savings.
"Out of all the budget processes we've been through, this is the most difficult," Schafer said of a conversation with fellow veteran council member Gord Budd. "This is one that actually we're seeing sort of the most cuts in this budget by a very wide margin than we've seen in any budget that we've been a part of in the past 10 years."
The bottom line for the proposed Capital Reserve Bylaw is to improve the city's financial position in purchasing equipment and improve city services.
"This will be helping us deal with the more minor items that are still capital, like new graders for snow removal, zambonis at our arenas, upgrades to certain city facilities, and things like that. So rather than using debt to finance those items, and paying it off over five, 10 or 15 years, we'll be able to just pay cash for it."
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