Peace River Agreement funds help Fort St. John keep municipal tax rates low
CFO presents draft 2024 Capital & Operating Budgets to Council
Like virtually everyone in Canada, the City of Fort St. John has faced increasing costs due to rising inflation and supply chain issues. But unlike most municipalities, the City hasn’t had to increase its tax revenue to make up the shortfall, thanks to the Peace River Agreement.
David Joy, the city’s Chief Financial Officer presented the draft Capital and Operating Budgets to council on Monday, during the committee of the whole meeting.
“Overall, administration is presenting to you a balanced budget, we’ve had some major challenges to address but we’re fortunate to have some financial mechanisms to mitigate and keep property tax increases significantly lower than that proposed by other similar-sized municipalities,” Joy told members of council.
Apart from some operational and maintenance expenses due to additional assets, the capital program has no effect on municipal taxes.
The Peace River Agreement funds significantly supports the city’s capital program – 77.7 percent – and also provides funds for developing initiatives, strategies and plans, water and sewer model development for the future, and support salaries and wages for the capital projects manager, bylaw technicians and property file scanning, explained Joy.
The list of planned projects in all five of the capital categories is long, and despite best intentions, Joy says that the city historically only manages to get through approximately 62 percent of the projects in any one year. The rest are deferred to subsequent years.
Among the capital projects planned for 2024, are the completion of the 100 Street Rebuild, Kin Park Stormwater Control, major sidewalk replacement and repair, and the paving of one of the few remaining unpaved residential streets in the city – 101 Ave., between 79 Street and 86 Street.
The total amount to be spent on roads in 2024 is $21.4 million.
In the facilities, buildings and parks section of the Capital Budget, the city plans to spend $13.8 million on a long list of items including fixing the drainage at Festival Plaza, completing the upgrades to Kin Park, upgrading the community trail by the hospital, and repaving the City Hall and North Peace Arena parking lots.
There is another very long list of items for 2024 in the studies, plans and projects section of the budget, estimated to cost $2.9 million. These projects include the Economic Development Strategy, Storm Water Management Plan, Public Art Initiatives, the Emergency Operations Centre equipment and training, an Official Community Plan update, as well as a review of Bylaws related to the Provincial Housing legislation.
The total Capital Budget for 2024 is $46.57 million.
On the operations side of things because of several factors which increased expenses, the Operating Budget was facing a shortfall. The effect of inflation on the cost of supplies and parts is one of these factors, as is the cost of insurance and the recently negotiated BCGEU and IAFF union contacts which mandated increases to members’ wages. The city has also spent more on community events and recognizing in-kind contributions.
In order to balance the budget, Joy recommends that municipal taxes be increased by 1.8 percent. This means residential property taxes in the city would go up $72; and commercial property taxes by $741.
“This would still be significantly lower than what other municipalities our size are proposing,” said Joy. “And it would still reflect that the PRA revenue helps the city reduce the tax effect on Fort St. John’s property owners.”
In 2023, Joy said that $1,295,000 of PRA revenue was used to balance the budget. For 2024, an additional $1,398,240 of PRA revenue is needed to balance the budget. These amounts are approximately 10 percent of the annual PRA funds received and is well within the 20 percent of PRA that is allowed to be used for items outside the Capital Budget.
“It is likely that future budgets will require moderate increases in tax revenue, in order to offset escalating costs due to inflation, supply chain issues, and maintaining current service levels, and perhaps reducing reliance on the Peace River Agreement revenue, other grants and interest from reserves, and on the contingency reserve,” said Joy.
Mayor Lilia Hansen noted that there were a lot of years where there were no tax increases, and Joy added that although over all the city’s draft Operating Budget contains a 4.25 percent increase, it’s far lower than comparably sized municipalities which are looking at average increases of 7.25 percent.”
"I don’t take for granted the effect of the Peace River Agreement revenue, in that we don’t have to implement an infrastructure gap percentage into our tax rate – we don’t have to put in a percentage for our capital program,” Joy concluded. “We are fortunate that way.”
The draft 2024 Capital and Operating Budget presentation can be viewed here.