The Community Charter requires that local governments approve a Five Year Financial Plan bylaw each year prior to the adoption of the annual property tax bylaw. The Financial Plan is also commonly referred to as “The Budget”.
The 2019 – 2023 Five Year Financial Plan Bylaw was adopted by Council on April 8, 2019.
The 2019 Five Year Financial Plan contemplates all expected revenues and expenditures in 2019 and the following four years. The 2019-2023 Five Year Financial Plan identifies the ways and means to achieve the Municipality’s financial objectives and strategic priorities as determined by Council. The 2019 Financial Plan includes a 6.7 percent increase in property taxes to fund the net increase in operating costs, a policy-driven increase for asset renewal and maintenance, and debt servicing costs related to the conversion of temporary debt to long term debt.
The 2019 financial plan also provides for a $126 increase in the garbage parcel tax (Waste & Recycling) to reflect the increase in transportation costs, required tipping fees and increased volumes of organic waste and recycling being processed on Bowen Island.
Property taxation in this plan will allow the municipality to continue delivering services important to the community and to contribute sufficient amounts to its reserve funds to support ongoing renewal and replacement of municipal assets.
The $6.4 million operating budget has been developed to maintain and improve Municipal services. Increases in the operating budget are driven by increases in contractual costs, inflation-based adjustments to staff compensation, energy costs, and debt servicing costs for the community lands.
Bowen Island Municipality’s funding sources are very limited with the majority of funding through property taxes, and then grants and user fees. As part of the budget process, all non-taxation sources of funding are reviewed for further opportunity before resorting to taxation. The Municipality relies heavily on the residential class with 97 per cent of its taxation revenue coming from this class.
General Fund capital expenditures of $4.3 million are required for 2019. The majority of the spending is for the replacement and maintenance of existing assets. Transportation Infrastructure initiatives also include two projects with significant grant funding from other levels of government. The 2019 to 2021 years include provisions for the replacement of the main Fire Hall and construction of a Community Centre.
Borrowing for the Fire Hall was approved in 2017. The Community Centre will be largely funded through leveraging grant funding from senior levels of government. The proposed Community Centre is a shovel-ready project and is contingent on the approval of a grant funding application for $7.9 million. Staff will be reaching out to the community with a referendum for borrowing to fund the Municipal portion of the project, following the announcement of grant results expected in late fall, 2019.
How does this affect you?
The increase in the property tax rate translates to an annual increase of $152 in 2019 to the average residential property assessed at $1,144,000. The waste and recycling parcel tax for all properties will increase by $126 in 2019. The illustration below summarizes the impact of the tax increase on properties with various assessed values.
The big picture of borrowing costs
What we are borrowing, and how much it is estimated to cost the average property on Bowen.
More detail on borrowing costs
The estimated cost of interest + principal payments we will be paying on our loans. Also known as cost of debt servicing.
|Year||Community Lands||Fire Hall and EOC||Community Centre|
|2023 and beyond||$106,000||$168,000||$226,000*|
Temporary borrowing for the aquisition of the Community Lands was converted to a 30 year long-term loan in 2018. As of 2019, annual debt servicing costs are about $106,000 per year.
Fire Hall and Emergency Operations Centre
In 2017, the cost to the average property for the Fire Hall and EOC loan was estimated at $68 per property per year. The cost is now estimated to be about $73 per year, due to higher interest rates.
The cost of debt servicing changes, between 2019 and 2022, because we will only borrow funds in incremental amounts as they are needed. The debt servicing payment (principal + interest) stabilizes annually in 2022 for a period of 30 years.
The cost of debt servicing changes, between 2020 and 2023, because we will only borrow funds in incremental amounts as they are needed. The debt servicing payment (principal + interest) stabilizes annually in 2023 for a period of 30 years.
*Debt servicing payments are offset by the amount we will no longer be paying in rent when we move in $127,000 a year).
How will the cost of debt servicing affect the average property’s taxes?
In 2019, the average property on Bowen is assessed at $1,144,000. The amounts calculated for the “big picture” above are based on the cost of debt servicing in 2023 and until the end of the term of the loans.
The 2019-2023 five year financial plan takes into consideration debt servicing and other operating impacts associated with major capital projects. The anticipated increase to Municipal taxes is estimated to be about 5% per year for the next five years.
Chief Financial Officer