Stealth Taxation?

Stealth Taxation?

Postby CTF » Nov 30th, 2017, 3:26 pm

So the City says for the 2018 budget a 3% tax hike is needed.

Here is my question....back when the City borrowed money for the SOEC they also said a tax increase was needed to pay for that...fair enough.

However from my research there was I believe 3 separate loans to build the SOEC. I happen to have a copy of the 2012 City of Penticton budget and from those days it shows...

Maturity Purpose Actuarial Interest Principal Outstanding owing as of 2012

2017 SOEC - Off-Site Servicing $99,034 $337,400 $583,037 $3,842,083
2017 SOEC Project Casino $113,181 $385,600 $666,328 $4,390,954
2018 SOEC Project Casino $515,000 $832,909 $104,000 $6,463,083

Based on this data the City will be retiring 2 substantial loans this fiscal year and the final one next year. Ultimately this means some significant fiscal capacity is going to be opened up yet no mention of this from City officials and they still say a 3% increase is needed for 2018.

If you factor in that this newly opened up fiscal capacity is likely being quietly filled by other spending measures (like the new communications staff, engagement officer, special projects person, etc,etc) the actual increase is more then 3%

What does everyone think about this? Am I wrong here?

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Re: Stealth Taxation?

Postby twobits » Nov 30th, 2017, 9:15 pm

CTF wrote:So the City says for the 2018 budget a 3% tax hike is needed.

Here is my question....back when the City borrowed money for the SOEC they also said a tax increase was needed to pay for that...fair enough.

However from my research there was I believe 3 separate loans to build the SOEC. I happen to have a copy of the 2012 City of Penticton budget and from those days it shows...

Maturity Purpose Actuarial Interest Principal Outstanding owing as of 2012

2017 SOEC - Off-Site Servicing $99,034 $337,400 $583,037 $3,842,083
2017 SOEC Project Casino $113,181 $385,600 $666,328 $4,390,954
2018 SOEC Project Casino $515,000 $832,909 $104,000 $6,463,083

Based on this data the City will be retiring 2 substantial loans this fiscal year and the final one next year. Ultimately this means some significant fiscal capacity is going to be opened up yet no mention of this from City officials and they still say a 3% increase is needed for 2018.

If you factor in that this newly opened up fiscal capacity is likely being quietly filled by other spending measures (like the new communications staff, engagement officer, special projects person, etc,etc) the actual increase is more then 3%

What does everyone think about this? Am I wrong here?


Nope, you are absolutely correct. You can almost nail to the the dollar that the 3% increase is for lipstick on the pig downtown.
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Re: Stealth Taxation?

Postby Tony » Dec 1st, 2017, 7:30 am

CTF wrote:So the City says for the 2018 budget a 3% tax hike is needed.

Here is my question....back when the City borrowed money for the SOEC they also said a tax increase was needed to pay for that...fair enough.

However from my research there was I believe 3 separate loans to build the SOEC. I happen to have a copy of the 2012 City of Penticton budget and from those days it shows...

Maturity Purpose Actuarial Interest Principal Outstanding owing as of 2012

2017 SOEC - Off-Site Servicing $99,034 $337,400 $583,037 $3,842,083
2017 SOEC Project Casino $113,181 $385,600 $666,328 $4,390,954
2018 SOEC Project Casino $515,000 $832,909 $104,000 $6,463,083

Based on this data the City will be retiring 2 substantial loans this fiscal year and the final one next year. Ultimately this means some significant fiscal capacity is going to be opened up yet no mention of this from City officials and they still say a 3% increase is needed for 2018.

If you factor in that this newly opened up fiscal capacity is likely being quietly filled by other spending measures (like the new communications staff, engagement officer, special projects person, etc,etc) the actual increase is more then 3%

What does everyone think about this? Am I wrong here?


That's a good point CTF, but maybe the increase would have been 6% or 8% if they didn't have the extra fiscal capacity. Did you factor in things like inflation and extra costs? I'm sure running the City isn't cheap - they've agreed to bring in more RCMP over the next 5 years, which is an added cost, things like the flooding last year adds to the infrastructure costs etc, etc. Infrastructure project such as (what twobits calls the lipstick on the pig, which I don't agree with that statement... I think that they need to revitalize Downtown and make it way more viable, but that's a different story....) there is costs involved in that. Unless you see the complete budget, I don't think you can point a finger at (love 'em or hate 'em) Council and say you don't need the money.
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Re: Stealth Taxation?

Postby twobits » Dec 2nd, 2017, 6:22 pm

Tony wrote:(what twobits calls the lipstick on the pig, which I don't agree with that statement... I think that they need to revitalize Downtown and make it way more viable, but that's a different story....) there is costs involved in that.


Who pays for all the water, sewer, parking maintenance and periodic revitalizing face lifts at Cherry Lane? The merchants themselves or the taxpayers?
Virtually every City in the first world has gone through, and continues to go through, declining commercial districts. The answer to revitilizing them has always been private capital.....not taxpayers plugging holes in a sinking boat to keep it afloat for another ten years for the next round of multi million dollar Hail Mary makeup.
Heck, if the City had not started on this endless path of revitalizing downtown every 10 yrs 40 yrs ago, chances are private capital would have bought up whole blocks or significant portions of and replaced sewer, water and streets in their plan at their own cost.
Assessed values would go up, tax revenue to the City would go up, and it wouldn't have cost taxpayers a fraction of what it is now to support values on 100 yr old buildings.
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Re: Stealth Taxation?

Postby fluffy » Dec 3rd, 2017, 9:40 am

twobits wrote:Who pays for all the water, sewer, parking maintenance and periodic revitalizing face lifts at Cherry Lane? The merchants themselves or the taxpayers?
Virtually every City in the first world has gone through, and continues to go through, declining commercial districts. The answer to revitalizing them has always been private capital.....not taxpayers plugging holes in a sinking boat to keep it afloat for another ten years for the next round of multi million dollar Hail Mary makeup.
Heck, if the City had not started on this endless path of revitalizing downtown every 10 yrs 40 yrs ago, chances are private capital would have bought up whole blocks or significant portions of and replaced sewer, water and streets in their plan at their own cost.
Assessed values would go up, tax revenue to the City would go up, and it wouldn't have cost taxpayers a fraction of what it is now to support values on 100 yr old buildings.


Private capital takes over at the property line, public property is just that. I share council's vision for a vibrant "boutique" style commercial/residential mix for downtown, a model that has worked well for many inner city areas both near and far. Two of the biggest hurdles for Penticton are downtown property owners who support a status quo approach to aging buildings and a general public happy to take their shopping dollars down the road. Throw in a vocal minority who deny the importance of the tourist dollar to Penticton and you have a recipe for stagnation. I for one, am thankful that council has the foresight to see past that.
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Re: Stealth Taxation?

Postby onestop67 » Dec 4th, 2017, 12:34 am

fluffy wrote:Private capital takes over at the property line, public property is just that. I share council's vision for a vibrant "boutique" style commercial/residential mix for downtown, a model that has worked well for many inner city areas both near and far. Two of the biggest hurdles for Penticton are downtown property owners who support a status quo approach to aging buildings and a general public happy to take their shopping dollars down the road. Throw in a vocal minority who deny the importance of the tourist dollar to Penticton and you have a recipe for stagnation. I for one, am thankful that council has the foresight to see past that.


I will try to make a very simplified post about how budgets work.

I could post a detailed explanation, but that would involve me having to get a complete breakdown of the city's budget, audit it, and post the results. And to be honest, I don't care enough to waste that much time to explain it to people on Castanet.

Last years city budget was X amount. Yes, it included things such as the final years of payments for the SOEC.

So now that the SOEC payments are off the books, our city budget should go down??? Nooooooooo...

This years budget includes a massive amount for infrastructure upgrades.

So just because we paid off a debt from previous tax increases, doesn't mean that we don't need even more money now to pay for completely different issues.

Just because a huge capital project was paid off in 2017, does not mean the 2018 budget should be less.The 2017 budget covered that SOEC amount. The proposed 2018 budget, and any increase, will be related to what the City actually needs THIS year to pay for the next round.
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Re: Stealth Taxation?

Postby kgcayenne » Dec 4th, 2017, 9:05 am

When I read about people who don't understand this sort of thing, I wonder: At what level of disrepair have they have become comfortable; or is it that they have absolutely no clue about what it takes to run and maintain anything because they have the luxury of someone else doing it all for them?
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Re: Stealth Taxation?

Postby southy » Dec 4th, 2017, 9:47 am

kgcayenne wrote:When I read about people who don't understand this sort of thing, I wonder: At what level of disrepair have they have become comfortable; or is it that they have absolutely no clue about what it takes to run and maintain anything because they have the luxury of someone else doing it all for them?


KG .. Speaking of not understanding, sorry, I'm not quite sure who the they are?? Are you referring to mayor and council, city staff, or taxpayers? Please clarify thanks.
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Re: Stealth Taxation?

Postby kgcayenne » Dec 4th, 2017, 3:10 pm

onestop67 wrote:So just because we paid off a debt from previous tax increases, doesn't mean that we don't need even more money now to pay for completely different issues.

Just because a huge capital project was paid off in 2017, does not mean the 2018 budget should be less.The 2017 budget covered that SOEC amount. The proposed 2018 budget, and any increase, will be related to what the City actually needs THIS year to pay for the next round.


I am talking about when people don't understand what was discussed in the post directly above mine. It is quoted and highlighted for convenience.

So, what I'm saying is that when people think that....


... this exhausts me. nevermind.
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Re: Stealth Taxation?

Postby southy » Dec 4th, 2017, 3:47 pm

Oh now I get it! Thanks.

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Re: Stealth Taxation?

Postby twobits » Dec 6th, 2017, 7:02 pm

onestop67 wrote:[

Just because a huge capital project was paid off in 2017, does not mean the 2018 budget should be less.The 2017 budget covered that SOEC amount. The proposed 2018 budget, and any increase, will be related to what the City actually needs THIS year to pay for the next round.


What is missing in your analysis is the City's perception or definition of "needs". It seems quite clear that every other taxation authority in the Okanagan Valley works with a taxation rate per 100k in assessed values far lower than Penticton and have done so for decades. So my question to you and all....why despite taxation rates being significantly higher here than other very similar communities for all these years, why are our "needs" so much higher?
My short answer is brain dead voters except for a short period of time when we had a cpl of Councils that tried to reign in our gluteny with civic expenditures and budgeting. The reality is our infrastructure deficit was not created over decades of time with under funding.....it was created over decades of poor budget priorities on things like planters, paving stones, and staffing levels at huge salaries that they couldn't even house them within the space of our own City Hall instead of sidewalks, water mains and sewer. Not to mention a grant to every one who asks.
The simple question is why do other communities not have the budget pressure we have and have significantly lower tax rates??
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Re: Stealth Taxation?

Postby Darkre » Dec 7th, 2017, 1:06 pm

twobits wrote:What is missing in your analysis is the City's perception or definition of "needs". It seems quite clear that every other taxation authority in the Okanagan Valley works with a taxation rate per 100k in assessed values far lower than Penticton and have done so for decades. So my question to you and all....why despite taxation rates being significantly higher here than other very similar communities for all these years, why are our "needs" so much higher?
My short answer is brain dead voters except for a short period of time when we had a cpl of Councils that tried to reign in our gluteny with civic expenditures and budgeting. The reality is our infrastructure deficit was not created over decades of time with under funding.....it was created over decades of poor budget priorities on things like planters, paving stones, and staffing levels at huge salaries that they couldn't even house them within the space of our own City Hall instead of sidewalks, water mains and sewer. Not to mention a grant to every one who asks.
The simple question is why do other communities not have the budget pressure we have and have significantly lower tax rates??

I'm not sure if you are serious with this question. I'm pretty sure I remember you stating previously that you were a business owner, or previously were, in Penticton. As a business owner you should know the exact reason for this. In fact, there were stories in the local rags on this very topic just a few weeks ago. Unfortunately they didn't go in to as much detail as they should have. The simple answer is Penticton has the HIGHEST RESIDENTIAL property taxes in the Okanagan because the city decided that to attract new business, and to keep what is here already, to have one of the LOWEST INDUSTRIAL and BUSINESS property tax multipliers in the province. Here is the story from castanet https://www.castanet.net/news/Penticton/212047/Biz-taxes-getting-too-low

Unfortunately the stories don't get in to the discussion on whether this is an effective strategy or not. Business property taxes are tax deductible. Residential taxes are not. A lower tax rate alone is not enough incentive for a business to move to another municipality. It doesn't hurt when a business is looking to set up shop but as property taxes are tax deductible, paying more or less doesn't have a huge financial impact on a businesses bottom line. In fact, as the property taxes are tax deductible it can almost be viewed as if the property taxes are being paid by the Federal and Provincial governments. In reality lowering the business property tax multiplier in effect transfers the costs from the Federal and Provincial governments to the residents of the municipality.

Specific detailed tax rates of the major cities in the Okanagan:
Residential
Kelowna 3.6366
Vernon 3.7822
West Kel. 3.5578
Penticton 4.3323

Major Industry
Kelowna 21.0991
Vernon 14.2828
West Kel. 10.6735
Penticton. 6.845

Light Industry
Kelowna 8.3521
Vernon 14.2828
West Kel. 7.5782
Penticton. 6.845

Business
Kelowna 8.3521
Vernon 10.3213
West Kel. 8.2898
Penticton. 6.845
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Re: Stealth Taxation?

Postby twobits » Dec 7th, 2017, 7:53 pm

Darkre wrote:I'm not sure if you are serious with this question.


I think you should read my response to your exact same post in another thread and quit foaming at the mouth and instead think for a moment about the economics and challenges of business and industry south of West Kelowna.
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