Extra tax hike every year won't be enough to pay for Kelowna roads and parks - InfoNews

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Extra tax hike every year won't be enough to pay for Kelowna roads and parks

City of Kelowna finance director Genelle Davidson poses for a photo.
December 03, 2018 - 4:00 PM

KELOWNA - Even if Kelowna hits taxpayers with an annual infrastructure tax, it won’t be nearly enough to pay for the $1.05 billion needed to build roads, parks and other facilities by 2027.

City of Kelowna finance director Genelle Davidson has proposed a 1.95 per cent infrastructure tax that could start in 2019 and be levied again in 2020, in an effort to tackle the city's infrastructure deficit.

If approved by city council, that will raise $44 million, which is less than 10 per cent of the $477 million shortfall in funding needed for the city's $1.05 billion spending plan.

She listed seven other revenue sources when she met with city council this morning, Dec. 3.

“Given that we don’t have a strategic plan addressing all those funding opportunities, we felt this would start bringing in some money to reduce the infrastructure deficit,” Davidson said. “We might want to have a cumulative levy.”

That would mean tax increases tied specifically to infrastructure would be added every year instead of the two years in the current proposal.

Most cities in the country have infrastructure deficits and about half of B.C.’s cities have some kind of infrastructure tax, she told council.

Vernon started charging 1.9 per cent in 2013 and continues to include that 1.9 per cent every year. If Kelowna did the same, it would raise $137 million by 2027, Davidson said. North Vancouver charges one per cent each year but also adjusts for inflation. That system would bring in $140 million for Kelowna, still far short of the $477 needed.

Other options include an increase in Development Cost Charges paid by developers and the creation of a storm sewer utility with a separate fee similar to what is already charged for sewer and water services.

Councillors suggested putting any increase in gaming revenues towards the deficit. Those monies now pay for debt and interest costs on the new RCMP detachment.

The other way to get out of the shortfall is if the federal and provincial governments restore infrastructure grants to cities.

Coun. Mohini Singh asked how Kelowna got into such a situation and was told by Infrastructure Engineering manager Joel Shaw that there were three main causes: aging infrastructure that has to be replaced, a growing city and one that is changing from an agricultural/tourism base into an urban centre.

When asked, Davidson predicted that an infrastructure levy, if approved, will likely be in addition to regular tax increases. She doesn’t expect those increases to be any different than the of three to four per cent annual increases of recent years. That means taxpayers could be facing a five to six per cent tax hike in 2019. Council will debate the 2019 tax increases next week.

“What staff has brought forward is certainly worthy of consideration,” Mayor Colin Basran said. “Even if we do as proposed, it’s $44 million and that’s just a drop in the bucket to continue operating as we are.”

Council received Davidson’s presentation and will have a full workshop on the options in February before making a final decision before the 2019 budget is adopted in the spring.


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