MUSKOKA – District of Muskoka taxes are expected to take a modest hike when council approves the region’s budget later this month.
Stephen Cairns, commissioner of finance and corporate services, presented the 2013 draft tax-supported operating and capital budgets at a committee of the whole council meeting on Jan. 30.
Cairns explained that district staff had accomplished council’s request of a zero-base budget that showed no increase to the levy, which is the tax rate.
And since the region’s assessment growth is estimated to rise by about 0.63 per cent, the tax rate could have dropped in 2013 compared to the previous year.
Councillors expressed their appreciation for staff’s work, but then approved several amendments that will raise the levy by one per cent, or $2 per $200,000 property assessment, in 2013.
Coun. Scott Young, district deputy chair, restated his argument during the meeting against zero-base budgeting because it threatens future financial viability.
“We would be better to implement steady, measured, small budget increases that keep pace with inflation and, in this way, create predictable budgets for our programs and a level rise for taxpayers,” said Young. “I’ve said that repeatedly and I stand by it today. I think this budget represents short-term gain for long-term pain.”
He noted that the treasurer’s report attached to the budget, as well as the budget document itself, continually references how a zero-base budget does not keep pace with inflation, defers strategic priority, diminishes financial resiliency, adds costs to future years and puts the debt reduction plan at risk.
He said he had never noticed such comments so frequently in any other budget document.
“While I accept that we can do this for one year, maybe two, we should all acknowledge that when we under budget for years in a row, it’s going to lead to years when higher than average budgets will be necessary to address crumbling service levels,” said Young.
He said that was the wrong path to go down.
Other councillors agreed while noting that not accounting for inflation, which is about 0.8 per cent, would threaten sustainability.
Council brought together several budget amendments from its four standing committees and added some items. Most of the additions will increase reserves rather than increase expenses.
Amendments included continuing support for senior programming initiatives in rural and remote areas for $58,100, increasing roads capital reserve funds by $360,000, adding $50,000 for a future third-party district organizational review, reinstating $80,000 to the environmental reserve that had been cut in the draft budget, and increasing the debt reduction reserve by $182,500.
There were several amendments that will not affect the levy because it will be offset by provincial funding or other revenue sources, said Cairns. Those amendments include a homelessness prevention initiative for $209,858, an activity aide for the district-managed Pines Long-Term Care home for $22,700, and about $350,000 in provincial funding for early childhood learning development programs.
The district’s gross operating costs are about $110 million and by the end of 2013 its debt will be reduced to about $82 million. A one per cent levy increase equals $623,700.
Council approved the budget as amended during the committee of the whole meeting. Council is expected to ratify its decision at its regular meeting on Tuesday, Feb. 19.
The increase in the tax-supported budget is in addition to the increase in the district rate-supported budget, which covers water, sewer and solid waste management.
Council previously approved the 2013 rate-supported budget, which will increase fees by about 76 cents per month for properties assessed at $200,000 that use an average of 21 cubic meters of water per month.