District of Tofino Considers 0% General Tax Increase in Light of COVID-19 Pandemic
Economic Impacts and Community Resiliency Top of Mind in Revised Budget
The District of Tofino recognizes the economic impact that COVID-19 has had on residents, business owners and the community at large. To provide immediate relief to property owners, Tofino Mayor and Council recently met with the District’s Management team to discuss immediate cost-saving measures while ensuring core and essential services remain available to the community now and in future years.
To minimize taxation in the first several years of the District of Tofino’s 2020-2024 Financial Plan, Council directed staff to make the following changes (explained further below):
0% general property tax increase in 2020;
The 2020 Capital and Infrastructure Levy will be reduced significantly, and fully funded from prior year’s surplus;
The District is confirming with the Province whether we can offer changes to property tax due dates; and
There will be a freeze on utility rates for 2020.
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0% General Property Tax Increase in 2020 Typically, the District increases the base amount of taxation each year by 2% to keep up with the rising costs of administration, fuel, hydro, materials and supplies, however in 2020 this tax increase will be 0%. In order to make this possible, the District has reduced budgets across all areas including staffing, travel, training and other expenditures, and as a result the community has seen a reduction in some service levels. For example, the District has closed the Community Children’s Centre and recreation programming has been cancelled until further notice.
The District of Tofino’s priority during the COVID-19 pandemic has been to maintain essential service levels, and the District continues to collect taxes for services such as Public Works, Utilities, Corporate and Financial Services, Bylaw, Planning and Development. In years 2021 to 2024 of the Financial Plan, taxation levels for general services will come back up to normal, with a 2% increase per year. These proposed increases will be reviewed annually, as the impacts of COVID-19 on future years becomes clearer.
No Capital and Infrastructure Levy from 2020 Property Taxation The District has been setting aside money each year since 2010 to save for the cost of replacing aging infrastructure. Typically shown on property tax notices as the “Capital and Infrastructure Levy” (C&I Levy), the annual amount to be collected is determined by the District’s Asset Management and Investment Plan. The C&I levy is part of a long term investment plan which includes a combination of reserve funds, debt and grants to ensure that the District is able to maintain and replace its assets.
This year, the levy has been adjusted to 10% of the proposed amount, and will be funded from 2018 general surplus, instead of property taxation. Staff is working on a gradual return to the optimal level of investment in infrastructure by 2023, and general surplus funds will be used towards a portion of the levy each year until then. The investment calculation considers a level of risk that allows for emergent events to occur that may impact contribution levels in the short term without significantly impacting the long term goals of the plan.
Tax Due Dates Property tax collection and due dates are mandated by Provincial legislation, meaning that local governments cannot alter them without approval. The District, along with other local governments, has requested that the Province allow us to offer an extension. Once we have further information, the District will establish due dates for 2020 property taxes and communicate these to residents.
Options for Deferring Your Property Taxes The provincial property tax deferment program provides low interest loans to qualified BC homeowners to pay taxes on their principal residence. There are two options under the tax deferment program: one for seniors, surviving spouses or persons with disabilities, and another for families with children.
If you think you will not be able to pay taxes on your principle residence by the due date, please consider deferring your taxes if you qualify under the program.
2020 Utility Rate Freeze The District is expecting a 35% reduction in utility fee revenue in 2020 due to reduced consumption in 2020. However, the majority of water and sewer operating costs are fixed and require stable user-fee revenue to continue. To avoid a user-fee increase this year, a transfer from the Financial Stability Reserve, as well as 2018 and 2019 surpluses, will be used for operations in 2020.
Financial Stability Reserve The Financial Stability Reserve Fund was established in 2019 to stabilize District revenues when there is an unexpected downturn in revenues and operating cost increases that are temporary.
In early 2020, the District transferred $20,000 from this reserve fund to pay for emergency response costs in relation to COVID-19. Many of these costs will be reimbursed by the Province however some expenses must be covered by the District. A further $60,000 will be transferred to the Water Fund in 2020 to assist with meeting operating costs. These funds made it possible to freeze utility rates for 2020 and minimize property taxation.
Funds from prior years’ surplus will further contribute to the Financial Stability Reserve Fund in order to ensure the resiliency of the municipality in the face of future economic downturns or emergencies.
Next Steps Staff are working to finalize the 2020-2024 Financial Plan and 2020 tax rates which will be presented in an open special meeting on April 30, 2020.
Our website will be frequently updated with new measures or information related to the COVID-19 pandemicthat becomes available at www.tofino.ca/blog/covid-19-updates.
