It’s possible that taxpayers in the Municipality of North Cowichan could see a tax increase of more than seven per cent in 2021.
That’s if council chooses to return to more sustainable tax and service levels next year after significantly reducing its planned tax increase in 2020 due to the COVID-19 pandemic in an effort to reduce the tax burden on residents during the uncertain financial times, according to a staff report presented at the council meeting on June 10.
Finance director Mark Frame said the municipality’s budget for 2020, which ended up seeing council implement a 1.4 per cent tax increase instead of the 4.4 per cent that was originally recommended, was fiscally restrained and there will be further impacts on service levels if North Cowichan continues this course in 2021 and beyond.
He said if council chooses the option of a one-time big tax hike of 7.2 per cent in 2021, the tax rates over the next few years would be close to the projections in the original five year financial plan, and see the proposed tax increase in 2022 at about 3.4 per cent, 4.1 per cent in 2023 and three per cent in 2024.
Frame said if council chooses to continue on its present course and ask for another fiscally restrained budget in 2021, the tax increase could be about five per cent next year, and some previously scheduled capital works projects would have to be deferred.
As well, he said that could lead to five per cent tax increases again in 2022 and 2023 before returning to three per cent in 2024.
“This option would provide more immediate affordability for taxpayers, but it would come with reduced service levels and may also help slow the recovery of the local economy,” Frame said.
North Cowichan’s CAO Ted Swabey said the municipality is not facing business as usual due to the health crisis, and is now in uncharted territory.
But he pointed out that the ongoing pandemic could provide North Cowichan with some potential opportunities as well as threats.
Swabey said the municipality could receive more operating and capital grants from senior levels of government through the crisis, and the pause in regular operations at North Cowichan’s facilities could allow staff to complete planned projects, like the current ones taking place at the Cowichan Aquatic Centre.
“But there’s also the risk of a significant recession occurring that would impact our revenues, and we could see financial shortfalls from our recreation facilities due to capacity restraints,” he said.
“There could also be new requirements on how we operate that could cost us more money, and we’ve already experienced the downloading of some costs from senior levels of government during the COVID-19 crisis and we expect that this will continue, so we’ll be doing more work that is not part of our core business.”
Swabey said staff would present more detailed budget information at the committee of the whole meeting on June 9 and would be looking for some direction from council as to how to proceed at the next regular council meeting on June 17 as staff prepare budget materials for presentation to council in the fall.