Kamloops council sticks to the two-per-cent solution

City council gathered for yet another budget session today and the focus was, once again, at least as much on numbers as on things. That is, “what can we keep” the percentage increase at, rather than “what does the city need.”

They began with a hypothetical increase of 5.6 per cent and ended the day with an increase of 1.92 per cent over last year. That will increase property taxes for the owner of an average home by $31.43. It was pretty predictable.

Roughly a year ago at this time I wrote about the two-per-cent fixation, in which various iterations of Kamloops council have become focused on keeping annual tax increases as close to two per cent as possible.

There’s no real rationale to this, other than that most years it’s pretty close to the rate of inflation. And, to be honest, two per cent sounds politically acceptable, since taxpayers/voters aren’t fond of receiving big tax bills. So today, they haggled over tenths of percentage points. Some wanted the increase to edge over the two-per-cent mark; others insisted taxpayers couldn’t afford it.

The two-per-cent/ rate-of-inflation approach to budgeting goes back 20 years, and there have been few exceptions — the 1998 council actually cut its budget by one per cent from the year before, and in 1999 kept the increase to zero.

For the three years ending in 1999, taxes went up an average of one per cent, while inflation rose an average of 1.6 per cent.

In 2000, 2001 and 2002, the council of which I was a member kept increases below two per cent. In 2003, a big year for offloading of costs from the provincial government, the increase was 3.6 per cent, but it settled down again, with some fluctuations, after that.

By the way, 2003 was also the year City council began basing its own pay on the annual inflation rate. And, the budget process itself began changing that year. Whereas in prior years, councils had studied the entire document line by line, the City had grown to the point where the document was so thick and complex it became impractical to do that.

So, they received instead a rough outline and a list of nice-to-do items that could be trimmed according to what council wanted for a bottom line.

While two per cent sounds like it’s not so bad, if you compound it, it starts to add up. For example, let’s go back a few years to when a two-per-cent budget hike cost the average homeowner $30, just about what this year’s increase is worth. I’m sure Sally Edwards in the City Hall finance department could calculate the exact amount in a jiffy, but without accounting for market fluctuations and such, you’ll actually be paying a couple of hundred dollars more per year than you were back then. And that doesn’t include utilities, which have a habit of going up as well.

Lots of things affect the City’s budget. Staff salaries, policing costs, insurance, roadwork, debt financing, the cost of supplies — it’s tough to keep a lid on it all.

You might think the council should cut staff and services if it needs to in order to keep the increase to zero or less, but if that happened, those services and facilities paid for from property taxes would constantly erode. Infrastructure expansion would not only stop, it would fall apart.

My main beef with the two-per-cent “magic” number is that it doesn’t pay much attention to vision. It looks only one year out.

Councils set their strategic plans for three years. Their budgets should be crafted around what each council wants to achieve during its three-year mandate, not around an artificial number.