Taxes! What are they good for?

Submitted by Janice on Thu, 27/04/2017 - 1:22pm

Dear fellow Rosslander’s,

            You may or may not be aware, but it is municipal budget and tax rate setting time again.  There is no really exciting way to start this conversation, but it might be one that you would benefit from taking a moment to look at.

            Over the last decade, we Rosslander’s have enjoyed a high level of services, and a minimal rate of tax increases, due to our municipal governments aversion to raising tax rates.  While that has been beneficial to us all every July 1st, when we pay our taxes, it has meant that the city has had to find efficiencies and increase productivity without adding additional money beyond a cost of living increase to the day to day running of the city.  At the same time, Rossland’s residential inventory has increased by 293 homes, and the number of homes occupied permanently, year round has increased by 191 homes.  We are the community of choice for new residents moving to our region.

            As we are all aware, Rossland has embarked on several large infrastructure projects since 2013.  The projects have increased the attractiveness and functionality of our community, and the city has done a great job of accessing grant money to offset costs.  But, there are still costs that the community is left to cover.

            In 2016, council developed a 4-year financial plan based on the information available to them at that time.  When council developed that financial plan, they were under the impression that Rossland was a stagnant city in both growth and revenue opportunities, and might actually be experiencing negative growth.  Since that time, council has received information from multiple sources confirming that our residential inventory, permanent residential households and population are all increasing.

            In spite of the addition information council has received, they continue to move forward with a financial plan better suited to a community in decline rather than a growing and vibrant municipality such as ours.  So, while a 4.75% municipal tax increase may seem reasonable, the additional revenue generated by that increase will fall $142,542 short of covering just the finance and interest charges on Rossland’s portion of recent infrastructure costs.  In addition, council has already reduced our budget by $250,000 in 2017.  Together, that’s $392,542 that will not be available for payroll, bylaw officers, snow removal, road repair, equipment replacement, culvert or retaining wall repairs, community supports, facilities maintenance or any other services that the city might provide, or that citizens have come to expect.  Rossland’s tax revenue increases have fallen short of covering the costs of financing and interest on these projects since 2014.  The current financial plan projects smaller tax increases, with a commiserate increase in shortfalls to cover the financing and interest, culminating in a $409,000 shortfall in 2021.  And that’s if there are no other additional costs incurred by the city until that time.

To understand how a 4.75% municipal tax increase affects you, the overall increase you could expect to see on your total tax bill will be less that 3%.  Over half of the homes and properties in Rossland (57%) will pay a $90 increase or less on this year’s bill, another 20% will pay between $90 and $102.  Homes or properties assessed at more than $300,000 (23%) will pay more.

            If the council choose to raise taxes enough to cover the additional cost of financing and interest on the cost of our infrastructure projects, we would need to raise our municipal tax rate by 8.11%.  Crap, that seems like a big number, doesn’t it?  Well, what that would actually mean is that your overall bill would go up less than 5%.  Over half the homes (57%) in Rossland would pay a $154 increase or less, or less than $13 per month, another 20% would pay between $154 and $175, up to $14.50 per month, and the 23% of owners who have homes assessed at more than $300,000 would pay more than $175 on this year’s bill.

            I don’t think anyone (including me) likes the idea of paying more for anything, but continuing to avoid our city’s financial responsibilities seems like the municipal equivalent of making the minimum payment on our credit card, and hoping for the best. This isn’t a plea to increase taxes so that we can increase spending in any one area, or for any one group, but so that we can all continue to enjoy the community that attracted us here in the first place, by adequately covering our mutually beneficial expenses.  I am willing to invest in this municipality to benefit and sustain the community as a whole, whether I use all the services or not.  I hope that you will provide council with your input, no matter your stance on the matter.  A public input session will be held by the City of Rossland the week of May 1-5.

Thanks for your time.

Janice Nightingale

 

p.s – If you want to calculate and compare your own municipal and total variable rate tax exposure, here’s how.

1. Take the assessed value of your home, and divide it by 1000 ex. $250,000 / 1000 = 250

2. Multiply that by the 2016 municipal mill rate (per thousand) - 7.1725 x 250 = $1793.13

3. Multiply that by the 2016 Total Variable tax mill rate - 12.5103 x 250 = $3127.58

4. Subtract the Municipal Tax from the Total Tax to calculate your regional taxes $3127.58 - $1793.12 = $1334.46

5.  Multiple the Municipal tax value only by the proposed tax increase (or for comparison, a higher increase) $1793.13 x 4.75% (0.0475) = $85.17

$1793.13 x 8.11% (0.0811) =$145.42

$1793.13 x 10% (0.100) = $179.31

 

            I have read that the hospital and regional taxes will remain the same this year as last year, so unless the school taxes go up, your exposure to regional taxes will remain similar to last years. If you have different information, use the same process to multiply the regional taxes by the percent increase.  To calculate your overall increase percentage, take the increase in municipal taxes, plus any increase in regional taxes, divide it by the 2016 total variable taxes, and multiply by 100.

$85.17/$3127.58=0.027 x 100 = 2.7%.

$145.42/$3127.58=0.046 x 100 = 4.6%

 

$179.31/$3127.58= 0.057 x 100 = 5.7%

Town: Rossland, BC
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Submitted by Janice on Thu, 27/04/2017 - 1:22pm.

Right, so I know this will stir up a hornet’s nest, raising taxes is never a popular choice.  But before you start beating the keys on your computer to death to let me know how ridiculous this position is, here is some more food for thought.

1.        Educate yourself, and use the formula above to determine your own personal situation.  I’m not here to tell you what you can or cannot do, crunch the numbers and make your own decision.  Remember, assessed value, not market value.  You got your notice in January or early February.

2.       We are going to make this town too expensive for lower income people!  Well, let’s examine that thought.  57% of single family homes in Rossland were assessed at under $250,000 in 2015.  84% of our housing stock is single family homes.  10% of our housing stock is apartments or condos.  Apartments and condo’s in Rossland can be assessed at as little as $50-60,000 in town, and as little as $60-70,000 at the hill.  29% of single family homes were assessed at less than $199,000.  Are we to assume that the residents with the lowest incomes are owners of the 23% of homes valued at over $300,000?  I think it’s very fair to say,” probably not”.  So, owners of these lesser valued properties will pay significantly less than the “average” $250,000 home.  If they save on their property taxes, and lose services, what will the cost of that be?  If we lose services due to a self-imposed restriction of revenue, people with lower incomes and their families will not be able to have their social and recreational needs met in our community and will have to travel to neighbouring communities for everything.  If you have the luxury of a car and spare time to do that, great.  If you rely on public transit, and work more than one job to make ends meet, going up and down the hill for everything is pretty onerous.  In short, we are more likely to make this town more expensive and less attractive to families and individuals on lower incomes if we cut services, instead of raising taxes reasonably.

3.       Who benefits the most from keeping taxes artificially low?  Hmmm, lets look at the other end of the spectrum for a moment.  Owners of higher value properties will pay proportionally more.  That’s how our taxation system is set up.  The greatest costs will be incurred by developers and short term vacation rental property managers, who own multi-millions in property.  If their costs go up, they have a mechanism to recoup their costs by passing the expense on to their customers.  It’s no different than passing on the costs of building supplies to the end buyer, or covering the cost of linens and towels through rental revenue.  If our taxes stay low and we lose services, will it adversely affect those owners? Probably not, these owners are making money by selling “The Rossland Experience”, and for people coming to our town for 2 weeks a year, a senior’s hall, or a community centre, or a library or recreation or cultural facilities are not the main draw.  However, “The Rossland Experience” includes being immersed in an amazing town with great grocery and other shops and restaurants supported by the year around inhabitants of our community.  So, the developers and property managers would love to continue lunching off our success’s without paying for any of the costs, and keeping their profit margins healthy.

 

4.       What about the Seniors!  Such an important question.  The province of B.C has a program for homeowners at or over the age of 65 called the Property Tax Deferment Program. The only requirement to participate, is that you are a home owning senior.  The program allows our seniors to access the equity they have built up in their homes by providing a low or no interest loan to the homeowner that is not payable until the home changes title.  So, seniors stay until they are ready to move, and free up the cost of all their property taxes as additional disposable income for themselves in the meantime.  It’s a win for the municipality as well, because the city still gets the revenue it needs to maintain facilities and services – and maybe even expand senior’s services as our population ages!

Submitted by May on Thu, 27/04/2017 - 2:19pm.

Are you an accountant? a politician? Do you work for the town hall? What is the reason of this  post? What is your agenda? Data mining can be done in so many different ways and your interpretation of the level and percentages of Rossland taxes and Rossland population incomes  is arbitrary and unsupported. I am not convinced. i lived here 10 years. i saw the decline in services and the increment in taxes. Are you fishing for a vote? Why is your letter posted in so many online outlets? Btw, I am about to go to the swimming pool down in Trail where I will pay double than I used to since Rossland decided to put my tax money elsewhere compared to when I first moved here 10 years ago...to give you an example

Submitted by Howser on Thu, 27/04/2017 - 7:42pm.

Maybe providing an opinion, advice or campaigning, call it want you want, is the motive for her efforts. Sharing information, both supportive and critical opinions, is necessary for working together.

Questions are the best way to gain deeper insights and develop more innovative solutions. Children learn by asking questions. Students learn by asking questions. Adults have been trained not to ask questions, particularly regarding economics and politics. That opaque approach isn’t working very well. Rossland isn’t alone in looking for solutions to financial problems.

Don’t look at this too deeply searching for alternative motives. Good on her if the motivation is to offer some of the information we need to make informed decisions.

http://tvo.org/video/programs/the-agenda-with-steve-paikin/the-intellige...

Submitted by Howser on Mon, 01/05/2017 - 6:26pm.

Thanks Janice for sharing the simple formulas to calculate how a proposed tax increase affects a resident. I guess my first question would be, ‘Why propose a tax increase that doesn’t even cover the debt financing costs?

The austerity measures seen nearly everywhere are in response to much larger problems. Some communities can fight back against these measures much better than others. I think Rossland is one of those great places.

The present financial system can’t solve the problems it creates, it just moves them around. That said, a bottle of wine or 6 pack once a month in exchange for the vibrant community that has so many activities within a 5 minute walk, bike ride or a shuttle bus is manageable.