The city’s “rainy day fund” could cover lost revenue from appeals against commercial real estate

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The city council is considering using money from a rainy day account to cover nearly $ 500,000 in asset losses from the commercial and industrial sectors, rather than raising their taxes.

The city council is considering using money from a rainy day account to cover nearly $ 500,000 in asset losses from the commercial and industrial sectors, rather than raising their taxes.

During the Executive Committee meeting on May 25th, the council voted 6-1 to set the allowance for appeals against commercially valued assets at five percent that year and withdraw the money from the accumulated surplus account. The Council would then re-examine this decision during its discussion on tax policy in 2022.

Count. Heather Eby was against it.

The recommendation will not be official until the Council approves it at a future ordinary Council meeting, most likely on June 14th.

Covering lost revenue from appeals against commercial and industrial assessments was part of a broader discussion on the proposed tax policy for 2021.

The city administration had originally recommended setting the allowance for appraisal complaints for these property classes at five percent and financing it from these classes, revising it annually and adjusting it to the expected future loss of complaints. The mill tariff factors would also be adjusted to compensate for the lost revenue.

The council voted 4-3 against the recommendation, with Mayor Fraser Tolmie and councilors Doug Blanc and Heather Eby in favor and councilors Jamey Logan, Crystal Froese, Dawn Luhning and Kim Robinson against.

Valuation complaints

As of 2017, the total valuation of commercial appeals is $ 31.7 million, representing a loss of $ 344,978 in municipal revenue, a council report said. However, the community has successfully contested multiple losses – through the Saskatchewan Assessment Management Agency (SAMA) and the Saskatchewan Municipal Board – resulting in the city receiving a $ 74.4 million taxable tax bill back.

The appointment allowance was applied to the commercial and commercial property classes in 2017, 2018 and 2019 to make up for lost revenue. However, in 2020, the cumulative surplus covered the appeal losses of $ 65,381.

The cumulative surplus will cover last year’s operating deficit of $ 194,000, leaving $ 1,343,000 in this account to cover the $ 500,000 in appeal losses, the report said. That would leave approximately $ 843,000 in this fund.

View of the city administration

City hall can permanently lose revenue if property owners successfully challenge their valued assets, said finance director Brian Acker. This brings the community into a deeper problem in which it cannot generate enough taxes to operate.

He added that the loss of $ 500,000 in taxes of $ 29 million in total tax revenue was a significant loss.

Discussion in the council

The city council’s original recommendation is appropriate when something returns to normal and shops and restaurants are back on track, Luhning said. However, it did not think it appropriate to add more costs to the commercial and industrial sectors now, as the Council had already budgeted a tax increase for this year.

Eby declined to endorse the second recommendation, saying the council was not making the tough choices to address this issue.

“We always seem to find another bunch of money to make a decision easier,” she said. “It’s a short-term solution and the more we do this, the sooner we won’t have that solution and the sooner we’ll have to make some really tough decisions when the sky falls.”

She also pointed out that taking the money out of the accumulated surplus is withdrawn from the taxpayer as it is tax revenue.

“I don’t like reducing that excess because it’s our buffer in the event of a … disaster,” she added.

When it rains it pours

Using the accumulated surplus to cover the loss of appeal is the right decision for another year, Froese said. In the meantime, it is great that the ward is finally winning the provincial vocational exams, but the council needs to resolve this lingering problem.

“The fight is really out there right now,” she remarked. “I know things are looking better every day, but it’s been very stressful and turbulent for companies. We were very good (tax) stewards…. Surpluses and accumulated surpluses apply to rainy days. In a pandemic, I don’t know where you get wetter. ”

People often talk about companies’ ability to pay for increased taxes, but fail to realize that those increases are usually passed on to renters or added to food costs, Logan said. At the moment, many tenants – such as corner shops, candy stores or nail salons – are struggling with the pandemic.

“Is it perfect (using the accumulated surplus) in 2021? It’s a fund for rainy days. It’s raining. We can check this again around budget time, ”he added.

The next board meeting is on Monday, April 14th.



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