As the municipality gets ready to finalize its financial plan for the years ahead, chief administrative officer Liam Edwards says Bowen is in the midst of climbing a ‘capital plateau’ with regard to the many capital projects currently underway on the island.
“These are projects that have been in the works, some of them for decades, and they all happened to be coming together at a similar time,” says Edwards at the May 2 council meeting. They include the community centre, fire hall and replacement fire truck, along with significant investment in road rehabilitation and a new composting facility.
To fund the projects, Bowen’s property taxes are set for a rise this year. Originally at 10.4 per cent in the first draft of the budget, further savings were found in the past week, and a final raise of 7.8 per cent was settled on. This makes the average property tax increase around $217, down from $287.
“This budget has probably been one of the toughest budgets we’ve ever faced at the municipality, there’s no question about that,” says mayor Gary Ander. “I think there’s a perfect storm of the timing of a lot of capital projects that came due… we would have liked to have staggered them, but that’s just not the way it happened.”
Edwards added much of the capital project funding comes through grant opportunities, and it’s not always up to the municipality when those come around. “It’s really hard to say no to that when that’s an asset and a service that you want,” he says specifically in reference to the $7.9 million offered in grant funding for the community centre.
The CAO also said to make a project happen, at some point the bill is going to come due. “For long-term debt financing, you will still have a place and a point in time where you’ll be carrying all that same debt. Unless you’re able to spread it out over a 30-year time period, you will never avoid having to carry that same debt load at some point in there.”
“It does feel like a lot (the debt), because Bowen has had the luxury of having very limited and next-to-no debt. But in order to achieve the services and the goals the community has set out, we have to incur some debt,” says Edwards.
Department savings identified
Despite the capital realities, staff were able to find some savings in the draft budget, and even managed to work in a new full-time employee for the public works department. Reduced maintenance costs of $14,500 helped allow for the addition of a new employee for the roads crew at an estimated partial year cost of $43,000.
Edwards says the new hire will serve a dual purpose of making work safer and saving money. The roads crew currently has three staff members which means one person finds themselves on their own, which is less safe and less productive.
Now, two teams of two will mean one worker always has an eye on the other, and will allow the municipality to start dedicating its time to the road rehabilitation area of capital projects. It’s estimated $25,000 to $75,000 could be saved on culvert replacements as a result, instead of having to outsource the work. As a result the annual roads and renewal infrastructure budget was dropped from $1 million to $960,000 this year, and decreased $75,000 for the four years after.
“I really look at that as a huge cost savings for us and I think that’s great that we’re looking at it from reducing contracting fees by keeping this in-house,” said Coun. Rob Wynen.
More savings found among departments included $28,750 in fire and emergency, $16,920 in community recreation, $12,500 in council strategic priorities, and $22,000 in parks and environment. The latter number allowed for the inclusion of $15,325 for a staffing increase to the parks department.
The library board also worked their budget down by $14,853, bringing total operating expense savings to $86,716. This reduced property taxes by 1.42 per cent.
Additionally, revised revenue estimates also helped lighten the tax burden slightly. Predictions went up for bylaw fines, grant revenues, business licencing, and most significantly $20,000 in building permit revenues, all totalling to $30,882, and allowing for another 0.5 per cent to come off property taxes.
Debt restructuring an option
Finally, chief financial officer Kristen Watson proposed a restructuring of Bowen’s debt repayments for the surplus lands purchased in 2005 for $2 million. Currently these are $106,038 per year, $64,000 of which is interest, and locked in until 2029.
Since then the municipality has sold $1.15 million worth of these lands, proceeds which went into the Land Opportunity Reserve Fund (LORS). The money was recently lent to Cove Bay for work on their water treatment plant, and residents are paying it back through a 10-year parcel tax.
Watson proposed the principal part of the annual repayment ($42,038) come from LORS, and the interest through property tax, instead of property tax paying the whole $106,038 each year. This brings down the current tax raise 0.7 per cent, but does mean there will be less money available to make a payment on the debt when the municipality can renegotiate in 2029.
Watson says the land will benefit all residents over time, so she was comfortable with shifting more of the debt to future property owners.
Between operating expense savings, revenue increase estimates, and the debt restructuring, $160,346 was trimmed from the draft budget, bringing the property tax levy down to $6,590,370. This equalled a 2.62 percentage reduction, for a final raise of 7.8 per cent instead of 10.4 per cent.
The various changes do mean the 2023 property tax increases are estimated at a more than 12 per cent jump. Watson says a big reason for this is many debt payments will start to come due; this number jumps from $215,596 in 2022 to $782,663 in 2023.
The CFO pointed out though that the actual dollar amounts of the property tax levy are lower than in the draft, due to the savings found this year. So while the percentage raise itself is higher, the actual property tax money required is lower as far as dollars go. This is the case through 2026.
Budget should be finalized next week
Council was largely supportive of the changes and voted 6-1 to send it to a final reading next week, with only Coun. Alison Morse opposing it. The municipal budget deadline is May 15.
“I think these capital projects are investments for the community of Bowen Island to be more resilient, to ruggedize ourselves from some of the shocks that may be coming, whether it’s a pandemic, whether it’s culverts washing out in some big storm,” said Coun. Sue Ellen Fast.
“There’s lots of things to worry about and I think these capital investments are investments that help us weather them together as a community,” says Fast.
Coun. David Hocking said he does “recognize that so many people are upset looking at this rate,” but added “there are a lot of things in a small community that are unavoidable. We have more kilometres of road per person than anyone in the region.”
“We also have expenses because we’re isolated. Other municipalities can share services like fire services, we can’t. So we have to have a fire hall that’s considerably bigger than what a 4,000 population would be if we were on the North Shore where we could have somebody who could come over and help us.”
“I really feel that staff has done an excellent job looking through this very carefully. This is not an excessive budget. It’s costing us quite a bit, but unfortunately that’s unavoidable,” said Hocking.