The following article appeared in the December 5 edition of the Guelph Tribune:
It’s now likely the city’s property tax hike for 2009 will be kept below four per cent, says Coun. Karl Wettstein.
“The chances of coming in below 4%, and maybe even below 3.75%, are somewhere between good and excellent,” Wettstein, who chairs the city’s finance committee, said in an interview Thursday.
On Tuesday, city council unanimously approved a motion put forward by Coun. Ian Findlay aimed at bringing the property tax increase down from 5.3%, which was the latest figure proposed by city staff. The motion instructed staff to examine how the city’s 2009 operating budget might be whittled down to 3.75% from 5.3%.
Findlay said Wednesday that he chose 3.75% as a number that “gives us a bit of wiggle room” to restore some spending and still stay below a 4% tax hike in 2009.
“We are living in extraordinary times,” said Findlay, who agreed his motion was related to the worldwide economic downturn.
The budget process, which saw an initial proposal made by staff last spring for a 6.5% tax hike in 2009, started “long before we knew what was happening with the banking system in the United States,” he said in an interview.
Even before the economy turned sour, city hall was hearing from citizens who were very concerned about their expenses, including taxes, Findlay said. He said the motion approved Tuesday “hopefully will represent council responding to the citizens of Guelph.”
The motion means council will get staff’s advice on prioritizing ways to bring down the budget.
Possible ways to reduce the operating budget include cutting existing city services; axing some or even all of the 2009 service enhancements which staff were recommending; more debt financing; amortizing some capital projects over longer periods; increasing user fees; and adjusting reserves.
Findlay said the advice from staff “will certainly guide us in our deliberations” on Dec. 15, when council is to pass the 2009 tax-supported operating budget.
Getting staff’s professional advice is better than council “hacking and slashing recklessly” on Dec. 15 to bring down the tax hike, he said.
Staff have said a 3.9% tax hike is needed to maintain city services at 2008 levels in 2009, but Wettstein said this number shouldn’t be compared directly to the 3.75% figure.
That’s because the 3.9% figure includes a lot of money for capital projects from the operating budget, and this part of the operating budget can be changed, he said.
The two main ways to adjust the amount of operating budget money needed for capital projects are to defer projects and to issue more debt, Wettstein said.