Homeowners will be getting a bit of a break with their tax bill this year but things could be different in 2021 as the city is expected to face some big financial challenges due to COVID-19.
Council held an online meeting Monday afternoon where they approved a lower hike than originally planned for the municipal portion of the property tax bill, from 3.5 per cent to 1.75 per cent.
It works out to a $42.5 increase for the typical home, down from $85.
“This would provide some financial relief to our residents and businesses. The revised tax rate increase would provide sufficient funding for base City service levels,” a staff report notes.
“The proposed 2020 tax rate increase would be one of the lowest in the Metro Vancouver region. It is our understanding at the report date that there is only one other municipality with a planned increase below two per cent in the region.”
Saying a lot of people are hurting, Coun. Lois Jackson wondered whether the tax increase should have been zero.
City manager Sean McGill cautioned the city is incurring many costs and any absorbed costs could have to be made up next year with a potential “double whammy’ for residents and businesses.
Coun. Jeannie Kanakos agreed, saying the tax increase does provide a reasonable balance and much needed flexibility.
Also saying some tough decisions may be coming in 2021, Coun. Bruce McDonald said the tax increase is a prudent one and that over the next few months the city will start getting a clearer idea what it faces next year.
Mayor George Harvie echoed that view, saying they looked at a zero increase scenario but found it’s currently a “big guess” whether that would create further problems.
Staff will bring forward a separate report to consider an extension of the property tax penalty date.
Delta staff note all necessary capital work will be carried out for safety purposes or asset preservation. In addition, any projects that are currently underway and funded are expected to continue
Staff originally planned to bring a recommendation on property tax payment penalty dates this week, however, last week’s provincial announcement of a change of the payment due date for certain property tax classes, as well as the due date for certain payments to other taxation authorities, prompts the need for further analysis, according to the finance department.
Council already deferred the penalty deadline for flat rate utilities from after March 31 to after June 1, 2020.
The report also notes the pandemic has impacted operating expenditures and revenues, while there will be other unforeseen costs due to COVID-19 response or recovery efforts.
McGill, noting the municipality faces cost increases and cash flow challenges, outlined some of the measures Delta has recently undertaken including a freeze on discretionary spending, no new staff hires unless essential, redeployment of existing staff to support critical services, reducing staff overtime where possible and equipment purchases frozen unless deemed essential.
This year is a challenge but next year could also be a big challenge with the ongoing uncertainty, he said.
The juggling of the books includes a number of other measures, while one of the most notable changes to the financial plan will be a delay of budgeted capital spending with some projects being put off for the foreseeable future.
The Parks, Recreation and Culture Sustainable Infrastructure Funding for new projects will also be deferred to future years.
“Property taxes and utilities are important source of revenue for the City of Delta, comprising 80% of our total revenues. As these revenues are ultimately collectible, the budgeted revenue has not been reduced to reflect any anticipated collection challenges,” the report explains. “However, failure to collect a significant percentage of these revenues could require further delays to capital projects as a cash flow management strategy during the period between the due date and ultimate collection date, which in some instances may be several years. Further potential reductions in the capital budget will be brought forward to council later in the year if required.”
Delta, which now also has the ability to draw upon $35 million from statutory and utility reserves if needed after council recently approved a borrowing bylaw, entered the pandemic in sound financial position with a surplus balance of $100 million in reserves.
However, the report notes the city faces a number of challenges, from decreased investment and development income as well as revenue loss with the closure of facilities, although admission, program and rental fee losses are being mainly offset by operational expenditure adjustments including layoffs at rec facilities.
It was noted at a meeting of the Mayor's Community Investment Standing Committee a couple of weeks ago that 2021 will likely be an even tougher year for the economy and for Delta.
