The Regional District of Central Kootenay’s board of directors have had their first glimpse of this year’s budget – along with a warning that choppy financial waters may be ahead.
“We don’t know if the last quarter of 2021 will look anywhere near the first quarter of 2020, and being able to predict that is easily the most difficult task we’ve got with respect to budgeting,” RDCK Chief Administrative Officer Stuart Horn told directors at a special budget meeting January 22.
He said the coming year will continue to see reduced service levels, opening and closing facilities, staffing difficulties, and unpredictable revenues.
“The uncertainty is even more prevalent in 2021. We don’t know what the rest of the year will look like,” he said. “With respect to 2020, with facility closures it’s a lot easier to predict how it will impact things, but with the reopening we are not sure how we are going to reopen, or when we can reopen.
“And due to the fact budgets have to be set by March, anticipating what is going to happen in September/October does carry a significant risk, especially financially.”
The opening session of the budget deliberations – which will go on for the next two months – brought the major issues to the fore and set general directions for the discussion. It’s important to note the decisions made at the January 22 meeting are preliminary, and will be included in a new draft of the budget, which still has to be ratified by the board later this year.
Surpluses and cost cutting
Horn noted that the COVID-19 pandemic is now estimated to have cost the RDCK $250,000 in direct costs in 2020. The board passed a motion to use some of the emergency COVID relief fund it received from the Province to offset about $193,000 of that.
Horn said the General Administration department is conservatively estimating a “rather large” surplus for 2020 of $300,000. The Building Inspections department had an even higher surplus ($460,000). Even the RDCK’s Fire Services had a modest surplus. There are also robust reserves in some departments, that can also be used to lower any needed tax increase.
“This will allow the tax increase to be significantly lower than what was originally proposed in the five-year financial plan,” he told the board. “[B]ut staff does want to point out that using surpluses to lower taxation simply pushes tax increases down the line, save for a change in service level.”
In all, the administration’s first crack at the budget set a tax increase at 1.8% – the rate of inflation.
New costs and budget pressure
On the negative side of the ledger, Horn pointed out pressures on that bottom line.
He noted that Community Services is going to continue its shift to providing outdoor recreation opportunities and support this year. Unlike last year, when facilities were open until February and closed completely for months, 2021 is a lot more hard to predict. As a result, “In 2021, we are going to have to move carefully to ensure we don’t get into a position where deficits are unavoidable,” he told directors.
Fire Services in general are becoming more and more expensive to deliver each year, he said, and composting and waste recovery efforts are also pushing up costs to the RDCK. Insurance rates are another pressure upwards.
Then there are projects that can’t be delayed any longer. The RDCK’s main office in Nelson needs a new roof and heating and cooling systems. While directors wondered if the $254,000 project could be delayed until a decision is made on adding another floor to the building, Horn advised against it.
“My only comment on timing is, if you’re putting a second storey on this building, you’re looking at a referendum,” he said. “And the roof and HVAC units will likely fail before that referendum.”
The board passed the motion to finance the building repairs.
The board also agreed to hire a purchasing officer this year, noting the position can save a large organization like the RDCK money. A Chief Financial Officer will also be hired, but not till October, balancing the need to save money with the need to fill the long-delayed position.
Directors put off improvements to the board’s audio-visual system and website redevelopment, but did approve hiring a marketing/communications officer for the recreation department in June.
The board removed all directors’ travel expenses for conferences except for the 2021 UBCM conference, and they reduced the electoral area directors’ allowance for workshops and conferences to $1,500 per rural director.
Some Fire Service operations also face big local budget increases, due to new equipment and staffing needs. Emergency Management is always a wild card, depending on weather and other natural disasters to determine costs. And directors still have to debate including long-overdue improvements to the 9-1-1 communication system for that department.
Besides the job of properly funding the services people want from the RDCK, directors also have their eye on the calendar. 2022 is an election year. That had Area F Director Tom Newell warning his fellow board members to avoid cutting too close to the bone.
In response to a motion calling for slashing director’s travel budgets and stipends further, he said, “If we don’t go to UBCM, [then at least] we’ve covered part of our 2022 increase in this budget line. I just want to, as we go through this, make sure we don’t rebound ourselves in 2022 and have tax shock.”
Right now the administration has set its proposed tax increase to inflation, or about 1.8%. The January 22 meeting reduced that a bit further.
But what you will actually pay depends on where you live in the regional district.
Residents pay a different tax rate according to the services they get from the RDCK – fire, water, libraries, recreation, economic development, etc. Your final tax bill will also depend on local municipal taxes, and provincial property assessment increases.
But Horn was able to approximate tax increases based on the initial draft budget. Using a benchmark house value of $250,000, here’s the size of the tax increase/decrease in your area: Area D: + $18.50; Area H: + $11.25; Area K: - $0.25; Village of Nakusp: - $34.50; Village of Kaslo: + $12.50; Village of New Denver: + $1.25; Village Silverton: + $4.00; Village of Slocan: + $34.50. (To calculate your tax bill increase/decrease, multiply by $250,000 increments of the value of your house. For example, for a $750,000 home you would multiply the increase or decrease by 3.)
These numbers are likely to change further as the budget deliberations continue.
The public will have a chance to weigh in on the proposed budget. Meetings are planned for the first week in February for Area H, New Denver, Slocan, Silverton and Nakusp, and the first week of March for Kaslo. Check the RDCK website for more information.
John Boivin, Local Journalism Initiative Reporter, Valley Voice