KELOWNA - Kelowna city manager Ron Mattiussi thinks using inflation as a yardstick for property tax increases just makes the type of problems the city is now facing worse.
"The rate of inflation, although an interesting benchmark, really should not guide these decisions,” Mattiussi said, to councillors considering a 4.11 per cent tax increase.
Kelowna council last week agreed to a provisional property tax rate increase of 4.12 per cent. Last year, it was 3.2 per cent
This year's increase was the largest property tax increase since 2008, when it went up 5.66 per cent under Mayor Sharon Shepherd.
Mattiussi provided councillors with a graph showing Kelowna council’s tax increase history over the last 31 years, which actually starts with a tax decrease of three per cent in 1983.
Whatever the council of the day was thinking, it was all over by 1986 when property taxes climbed over 8 per cent, dipped slightly then climbed a record 10.59 per cent in 1989, under Mayor James Stuart.
Increases for the next three years remained above nine per cent before dropping back down in the last two years of Stuart’s reign.
Shepherd’s relatively hefty increase ended a string of budget increases, stretching back to 1998 that never went higher than three per cent and was actually below two per cent for one memorable stretch from 2000 to 2005 under Mayor Walter Gray.
As pleasing as those budget are to local taxpayers, all they really do is defer larger increases to when infrastracture becomes outmoded or service levels start to drop, Mattiussi says.
"We saw with the Prosser report how we had to catch up with police officers, now we are catching up to infrastructure,” the city manager says. "By artificially tying the budget to inflation, it creates problems down the road.”
The Prosser report concluded Kelowna needed a supplemental increase of 21 officers on top of normal population increases just to catch up and reduce their onereous case load. The city hired the last of those officers this year.
Mattiussi says councillors can defend their budget decision as an attempt to get back to more reasoned budgets that don’t sacrifice long-term requirements for short-term political gain
"For a number of years, we have robbed Peter to pay Paul. It’s important to look at this budget in particular as trying to get back to equilibrium,” Mattiussi says.
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