Brief: Committee recommends flat 4.5% tax increase across all classes

A committee recommendation for a flat increase of a 4.5% property tax increase across all property classes is on the agenda for Revelstoke council deliberation on April 23.

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This bar graph shows percentage changes to the various property classes in Revelstoke over the past decade. In Revelstoke, Downie Timber is the only property in the major industry category. In the years after the 2008 financial crisis caused a big downturn in the economy and U.S. housing starts, which hurt the mill's market, the sawmill appealed for tax relief and received it. In 2013, the mill's rate increased significantly due to a policy that connected the rate to increases in the light industry category. That policy was removed in 2014. This accounts for the big swings in the orange bars. The utility category -- the red bars -- are governed by special provincial regulations that index the rate to other property classes. This is designed to prevent municipalities from gouging utilities out of political expediency -- utilities can't move and they have negligible voting power. The remainder of class-to-class variations resulted from a variety of reasons over several councils; usually this boiled down to prevailing political ideas about dividing the tax burden between residential and commercial taxpayers. —Aaron Orlando. Image: City of Revelstoke

The city of Revelstoke’s committee of the whole has recommended a flat 4.5% tax increase across all property classes such as residential, business and industrial.

Dividing up the pie (and hoping for the smallest piece)

The city’s annual budget process can be divided into two main steps using the metaphor of making then serving a pie.

First, staff and council determine the overall size of the pie — the size of the total proposed budget. That process has been completed. That determines the overall budget and the corresponding increase (or, theoretically speaking, decrease) to the portion of revenues drawn from property taxes compared to the previous year. (Other revenue categories include sources such as fees, grants and transfers from other levels of government.)

This bar graph shows percentage changes to the various property classes in Revelstoke over the past decade. In Revelstoke, Downie Timber is the only property in the major industry category. In the years after the 2008 financial crisis caused a big downturn in the economy and U.S. housing starts, which hurt the mill’s market, the sawmill appealed for tax relief and received it. In 2013, the mill’s rate increased significantly due to a policy that connected the rate to increases in the light industry category. That policy was removed in 2014. This accounts for the big swings in the orange bars. The utility category — the red bars — are governed by special provincial regulations that index the rate to other property classes. This is designed to prevent municipalities from gouging utilities out of political expediency — utilities can’t move and they have negligible voting power. The remainder of class-to-class variations resulted from a variety of reasons over several councils; usually this boiled down to prevailing political ideas about dividing the tax burden between residential and commercial taxpayers. —Aaron Orlando. Image: City of Revelstoke

This year, the overall property tax increase came to 4.5%. (Council-watchers might bring up sewer and water rate increases from earlier in the year, but that’s for another conversation outside of this brief.)

The next (and current) step is, once the total amount of the budget is set and the amount of revenue needed via property taxes is determined, it’s time to divide up the pie between the various property classes such as residential, business, light industry and heavy industry.

This year, the city’s committee-of-the-whole, which is essentially comprised of city council sitting at a committee meeting, has recommended a flat 4.5% increase across all categories. The committee met on April 11 to review a report from the city’s finance director, which recommended an increase without substantive changes between classes. The proposed flat increase keeps the distribution between the classes the same as the previous year.

A report from the city’s finance director provides more details on the proposed rates and states that the overall tax increase has averaged 2.8% annually over the past decade (although the residential class — the one most residents pay attention to — has increased by an average of 3.89% per year.)

City council will meet on April 23 to deliberate on the committee’s recommendation. There are still several steps to the budget process remaining, such as further readings of the bylaw, but essentially the final major council decision will come on April 23, barring any unusual, unforeseen developments.

See the caption in the above bar graph for a brief explainer on historical factors driving swings to the property class rates over the past decade.

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