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Kamloops election 2018: A newbie's look at the city's finances

KamloopsMatters caught up with the city's financial director to ask her a few questions
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CitySpending
A chart showing what percentage of the budget goes where. (Via City of Kamloops)

Leading up to the Oct. 20 municipal election, KamloopsMatters will be providing in-depth coverage of the issues that matter most to Kamloops residents. Based on comments in council chambers and on social media, the spending of tax dollars is a hot-button topic. Our goal is to enlighten and further educate our readers so they can make informed decisions when it's time to head to the polls. Should you have any questions or feedback, please email us at info@kamloopsmatters.com.

How cities spend money is always a contentious issue. No matter where our tax dollars go, someone is going to be unhappy.

We don't need an expert to tell us that. It's evident on the street and online. Amongst those comments are informed ideas. And, well, we'll just say some less informed ideas seep through, too.

To help everyone get a better idea of what goes on from a financial point of view, KamloopsMatters spoke to Kathy Humphrey, the city's financial director, about the budget. Everything from how money is collected to how it's all spent.

Collection of taxes and money

Humphrey says there are a couple of misconceptions on the collection of taxes.

While the city sets the tax rate, it's only one factor. B.C. Assessment, the provincial body that assesses property, is the other.

Each January, B.C. Assessment mails out property assessments. The assessment takes into account the location of the property (for example, a home in downtown Vancouver will be worth a lot more than a home in Aberdeen). The city will then set its property tax rate in the spring, and apply it to a home's assessed value. 

Another misconception is that all the money the city collects goes to the city.

"Lots of these other numbers on the property taxes are not the city's," explains Humphrey. "The hospital is not set by the city, the TNRD is not set by the city, the school tax is not set by the city and we don't get any of that money."

The city collects the money because it's the most financially efficient way to deal with the money, she says.

Where does all the moola go?

While property tax dollars make up the majority of the city's budget, they make up less than what people might imagine.

"Depending on the year, it's probably between 50 and 66 per cent property taxes, depending what else is going on," says Humphrey. "Then the other sources (of funds) are user fees of various types: there are recreation fees, there are rental fees, there are business licences, there are dog licences."

That variation year to year depends on a few factors, but the biggest is capital projects. Those are the big one-off construction projects people often see as they drive around town. Soon, Victoria Street West will be one.

Humphrey points out that this usually has the opposite effect on the percentage of the budget that's funded by property taxes, since most capital projects are often funded, at least partially, from non-tax sources like grants.

"In years where we spend a lot of capital, we tend to have other funding that goes along with it," she says.

City council approves budgets before setting a tax rate, so it's known how much money is needed before deciding how much to collect.

However, most of the budget is essentially set well before council's vote to finalize it. Moreover, city council doesn't have a say in many parts of the budget in a year-to-year sense, Humphrey notes.

For example, the largest cost for the city is policing, with 16.9 per cent of the city's total approved 2018 budget ($180.7 million) or roughly $30 million. The city has no control over how much officers are paid since RCMP contracts are negotiated at the federal level. Council could choose to request fewer officers at the Kamloops detachment, which would lower costs, but it's unlikely any council would make that choice.

(For clarity, policing only covers RCMP operations. City bylaw officers are in another category, along with legislative services.)

For comparison, Kelowna spends 28 per cent of its budget on police, according to the city's website (also with the RCMP) while the City of Victoria, which shares a force with other nearby municipalities, spends 23 per cent, according to an online report.

Fire services are the next biggest expense, at 10 per cent, and there a couple ways council could cut back on that cost, but Humphrey says it would mean a reduction of service. They could close a station or cut firefighting shifts (though it could be an unpopular move with residents).

Alternatively, during the next wage negotiation, city administration could be directed to bring down costs in the contract with the firefighters' union, but that could be difficult.

Along with transit, water and sewer costs, that's more than half the budget in five categories with very little wiggle room for the city unless services are cut.

"I don't know what'd you'd do on water; that's just the cost of it," says Humphrey.

Smaller categories are similar, with unionized wages and upper government regulations restricting any sort of short-term savings a council could decide on in a year which would affect taxes.

"The city has to follow a lot of regulations set by the province and the federal government," she says.

For example, street maintenance takes up seven per cent. Judging by comments on KamloopsMatters stories posted to social media, this is where most people would like to see more spending and take issue with how things are run. Humphrey points out that the city sees some of these complaints, but there are regulations that must be followed.

"The joke that always shows up, that there are six city guys sitting there; so much of that is not us," she says. "Every time you have to go stop traffic or put your truck on the road, there's a requirement to have traffic control and somebody watching them and making sure they're not getting hurt."

WorkSafeBC regulations, in particular, lead to an increase in costs.

If people want to be proactive on potholes, she says people could help by reporting them to the city. While it may be a big issue for some people, city staff don't go searching for potholes. Humphrey says she uses the MyKamloops app.

Recreation, parks and culture is often an area that is targeted for less spending by online commenters.

"The first thing people want to cut is cut the parks," says Humphrey.

Those costs are spread across four categories: recreation and culture (5.3 per cent), pools and Tournament Capital Centre (2.9 per cent), parks and playfields (4.5 per cent) and arenas (2.5 per cent). They total roughly 15 per cent of the budget in 2018.

The flipside of that is that user fees help offset those costs, though they don't cover the operating costs for them, so property taxes do subsidize them. That fact came up during the discussions about the future of Westsyde Pool a couple of years ago. City staff reported to council that the pool wasn't very economically efficient, but council decided to fix and reopen it due to community feedback, and that's an essential factor for how the city operates parks, according to Humphrey.

"I live in Aberdeen. I can honestly say I've never been to Westsyde Pool. It doesn't mean it doesn't have value to the people that live out there," she says. "Everything we do in the city matters to somebody."

Other misconceptions

Humphrey says other misconceptions show up. One issue is understanding what the city deals with. 

"A lot of the social issues that people are really unhappy about in our community are not really things that are within the city's jurisdiction," she tells KamloopsMatters.

These issues may cost the city in some ways, like addictions and mental health, while the root issues are outside the power of municipal governments.

"They impact all of us as members of this community, but mental health and social issues are not things that are supposed to be funded by the city; they're funded by the provincial government," she says.

The city can assist the provincial government in some ways, like providing land for housing, but building homes are under B.C. Housing and providing care lies with Interior Health.

Understanding the complexity of operations is an issue, too.

"It's not just as simple as picking up the garbage can and dropping it off," she says. "It's also the landfill and the responsibility to look after the landfill once it's all filled up and all the environmental impacts that go with the landfill."

So what does this all mean?

It means very little of the budget is discretionary spending that the councillors have control over. In the last budget, only $550,000 in supplementary items were added to taxation; in a $180 million year.

Capital projects cost a lot, but many are required maintenance, like the upcoming West Victoria Street project. They also are often planned for over several years so there isn't a significant tax hike. The $3.3-million Peterson Creek Multi-Use Path (which is running over budget) received a $1-million grant. The remaining $2.3 million comes from a fund the city has been putting money into for a few years, saving up for an active transportation project.

When it comes to the smaller amounts on issues that people seem to get angry about, there can be arguments about whether or not it's wasteful, but it should be noted that a $100,000 project would equal less than a dollar per a person or business, even if it was only funded directly from property taxes. Conversely, if the city or councillor points out savings of a few thousand as a reason to cut something, it should also be noted they're only saving a taxpayer a few cents.




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