Draft Budget and Tax Rates Provided to Council

Inflationary Pressure, Reduction in Port Payment in Lieu of Taxes Biggest Factors in Proposed Increase

PRINCE RUPERT, MARCH 22^nd, 2023 – The City of Prince Rupert’s Draft 2023-2027 Budget was presented at tonight’s open Committee of the Whole meeting, and is now available for the public to view, with public consultations scheduled for April 11^th and 24^th. This year’s budget has been significantly driven by external factors, with increasing national inflation impacting contract negotiations with the City’s multiple unions. In addition, devaluation of undeveloped lands held by the Prince Rupert Port Authority has caused significant revenue losses, and the Port Tax Cap places the burden of operational and capital expenditures on all other taxpayers (residents/businesses).

A comprehensive breakdown of the tax rate proposed in the Draft 2023 Budget is below:

• Labour Contractual/Benefit Increases – 7.1% (overall Consumer Price Index Inflation of 6.8%)
• Revenue loss from reduced Prince Rupert Port Authority Payment in Lieu of Taxes (PILT) and appeal proceeding costs – 4.3%
• Contractual Increase related to RCMP – 1.35%
• Staffing requests for under-resourced departments– 1.1%
• Net Fiscal Revenue/Expense changes – 0.55%
• Recreation – increase to pre-pandemic operations – 0.45%
• Legal costs – 0.45%
• Grant increases to Community Enhancement Grants (approved Fall) – 0.4%

Unlike other levels of Government, municipalities are not permitted to operate in a deficit, so each year we must balance the budget. After all other sources of revenue are accounted for, the above costs have contributed to a total 15.7% draft increase to the tax rate to make up the difference. This is what is proposed in order to maintain services at their existing levels, and represents an increase of $282 to the average homeowner this year.

Our internal rate impacts are similar to what other communities throughout BC and in the North are facing; however, our external impacts have bumped up the total proposed tax rate to be higher than our neighbours. Council will now deliberate and look to public for feedback, given this is a higher increase than proposed in past years. A final decision on rates will not be made until Council has the opportunity to receive public input. (See end of release for details on April consultations)

The Budget in Context

Although the operating deficit remains higher than desired due in part to factors beyond municipal control, the community will see significant investment through revenues primarily outside of property taxation. Out of a proposed historic $100 million in capital investment planned for this budget cycle, only $235,000 of that is proposed to be funded through property taxes. In addition to grants and borrowing, this has been in part achieved through dividends from Prince Rupert Legacy Inc. – revenue that has enabled several important projects to be completed with no impact to tax/rate payers. This year, dividends have offset capital and special projects by almost $3 Million, representing an otherwise 13.88% potential tax increase. Additionally, Legacy’s support for water infrastructure this year has offset water utility fees by $2.4 Million, or a 75.59% increase.

Council and staff have also successfully advocated for an unprecedented $65 million in funding towards replacing our water distribution infrastructure that’s in the most dire need of repair. Although this is money earmarked for a specific purpose, and cannot offset our operational cost increases, it will offset a potential future cost in utilities and will go a long way towards breaking our current cycle of emergency repairs. While this is most appreciated, the City will have to borrow to fund sewer line replacements in the same priority areas.

As previously mentioned, this year the City is also facing revenue challenges that are beyond our control. This includes the reduction in revenues from the reduced Payment in Lieu of Taxes on Port properties which accounts for 4.3% of the proposed increase – which also causes additional legal and appraisal fees to the City. The City has filed with the Dispute Advisory Panel to argue against the reduction in valuation, however a judgement on the dispute is not likely to be provided within 2023, and so cannot be accounted for within this budget season.

In addition, it should be noted that because of the cap on port industrial properties, the City is unable to share this increase among all property tax paying classes. In other words, the capped port industries will not share in funding these critical investments. If the City could charge all major industry operators the City’s Class 4 rate from last year, it would mean $2 million of the budget paid by everyday people and business owners would be paid by the port terminals. This is why municipal staff and Council continue to advocate for a resolution to the cap that makes Prince Rupert whole and secures sustainable revenues.

Opportunities for Input

As noted above, there are two public feedback sessions planned for April 11^th and April 24^th at 7 pm in Council Chambers, City Hall at 424 3^rd Avenue West. The public also has the added opportunity to directly interact with and understand the proposed budget via our online budget simulation tool, which is now live via engage.princerupert.ca/budget2023. Written comments can also be directed to finance@princerupert.ca on or before April 24^th, 2023. All feedback will be submitted to Council for consideration as part of their decision making processes.

The Proposed 2023-2027 Five-Year Financial Plan can be viewed here.

The first Public Budget Presentation can be viewed here.

MEDIA CONTACT:
Veronika Stewart, Manager of Communications, Engagement and Social Development
Office: (250) 627 0976
Cell: (778) 884 6285
Email: veronika.stewart@princerupert.ca