City Finances

[twobits]

This is a good read written by a well known and respected person.

City Finances by Rory McIvor
It's election time again. As usual, many statements will be made by well-intentioned individuals and candidates about the terrible state of Penticton's finances. Unfortunately, such comments often demonstrate an appalling lack of knowledge.

The overall City debt at the end 2010 stood at 80.6 million. No argument....a big figure! However, a look at the facts quickly puts this debt into context.


Within that figure is a remaining capital debt 22.0 million for the Event Centre. General accounting practices dictate that amount must stay on the books, but it is not really a debt as it will be retired in 2018 from ongoing committed casino revenues. That amount has zero impact on City taxes. There are those who argue that casino funding should not have been used. If Council of the day had followed that advice the Event Centre site today would be a vacant lot. To fund such a facility through conventional borrowing would have broken the back of Penticton taxpayers. Further, the Event Centre gained by referendum an approval rating of 80.3% in September, 2006 . The use of Casino funds was a landmark decision for the Province of BC simply because no municipality had done it this way before. Once the 40.0 million agreement had been reached with the Province, Penticton received many calls from municipal CEO’s and financial officers enquiring....”how did you do that?” That use of Casino funds has been reviewed and maintained by three successive Councils.


Further to these figures it should be understood that the overall debt figure includes 15.5 million for the sewage plant upgrade and 13.4 million for the water plant upgrade. Both were wise and very necessary environmental and capacity upgrades which speak to the health of our community. Both are funded by user fees which have no effect on general tax rates just as natural gas and electricity have no such impact. Before anyone jumps up and yells at me that user fees are a form of taxation my answer is....”I know that: but they still have no impact on tax rates. Water and sewer services are absolutely essential and non-discretional services.


To gain further perspective the current subsidy for the Event Centre operating costs is 1.66 million. Many who wave those costs about, either by design or ignorance, often fail to mention that a substantial portion of that bill goes to subsidize the operations of Memorial Arena and the Convention Centre. Prior to the Event Centre their annual subsidy was $750,000 thousand dollars. It should further be noted the current subsidy for the Community Centre, including the new pool is 3.0 million....which begs the question, at least for me, “why are people not attacking the Community Centre with the same enthusiasm they show towards their favourite whipping boy the Event Centre?


When you factor in the above figures you will find by any measure that Penticton is in reasonable financial shape and not anywhere near the critical financial situation that some will have you believe. In fact, in the Statement of Financial Position to December 31, 2010,the reserve fund stands at 12.1 million up from 10.5 million in 2009.


Using the latest assessment figures for 2011 the average assessed value of a Penticton home is is $346,420 and the average municipal tax was $1,334. That figure includes the school and hospital levies as well, levies over which the city has no control. So the average Penticton taxpayer pays $3.65 per day. That $3.65 gives you police and fire protection, roads, snow removal, library, recreation and convention facilities, a world class Event Centre and the list goes on and on.


The truth is I pay more for my cable TV and Internet services than I pay for municipal taxes.


In sum, when one examines Penticton's financial facts, one has to conclude that the City's finances are in much better shape than some would have us believe. The weather may be overcast and cloudy but the sky is not falling!
Posted by Rory McIvor at 17:25

[DblDwn11]

This was a good letter by Rory. Good for him for getting the facts out there and putting things in perspective.

It was also good to hear that the city budget is actually running below plan -- they might actually have a surplus by the end of the year.

Guess things aren't as bad at city hall as some people might think.

[spacecadet]

I agree, very well written letter by Rory McIvor. And I trust what he has to say. And I guess that's why the City feels that they can give up $500,000 plus in Development Permit costs and 5 years worth of taxes to a multi-million dollar corporation.

[twobits]

I agree, very well written letter by Rory McIvor. And I trust what he has to say. And I guess that's why the City feels that they can give up $500,000 plus in Development Permit costs and 5 years worth of taxes to a multi-million dollar corporation.

Space, I can appreciate that you may have missed the discussion and introduction of the Economic Incentive Zone bylaw but since it has appeared on your radar I would have thought you would have looked into it more and understood the benefits and reasoning behind it. While it may be unpalletable to think of a large company getting a financial break at first glance, you have to peel back a few layers and you will see it is a benefit to the community in the long run.
Both recent project announcments do this but let's take the cinema example. They have been struggling for a number of years to find a suitable piece of property. This was no secret. The liquidation world site was an option however environmental problems from past contamination prevented it. Cost considerations made in unviable. Then the channel crossing site became a possible solution. This project has been delayed for a variety of reasons both known and unknown. Then comes along the EIZ. With the incentives the liquidation world site now makes economic sense where it didn't before. Now, what you have to ask yourself is what makes more sense? To hold your nose and provide a tax break for five years and yes, give up 500k in taxes, but then get 100k/yr for the next 30 years. Or you could do nothing different from the status quo, have the land sit for lord knows how many more years, and have the cinema built on First Nations land from which you will receive zero tax revenues.......ever! And this says nothing about the benefits of revitalizing the downtown and it's many shops and restaurants. Small business owners just like yourself space. I am sorry this one did not indirectly aid your home based business but perhaps the next one will. We have to move forward for the benefit of the community as a whole and cannot lament everytime a certain policy or project does not benefit us directly, indirectly or personally.

[spacecadet]

You know, I don't have any problem with an incentive for a small business that may want to develop in the particular areas that the City would like to see some take place, but I still don't get why we are doing this for a multi-million dollar corporation? They were going to build somewhere in town over the past few years and I had heard that the Liquidation World site was on hold due to the contamination of soil because of there being an old gas station there. Landmark has had a deal with the City for some time whereby they had the monopoly. This is the kind of tax base we need to support our economy. Why are we giving it away?

And speaking of economy, interesting how Penticton rates in the Canadian Federation of Independent Business Report.