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FORSETH – A look at the proposed 3.38 percent hike for Kamloops taxpayers

(Image: Mel Rothenburger)

NOT THAT MANY days ago, Kris Sims, the B.C. Director of the Canadian Taxpayers Federation, stated that, “… people should brace for big tax hikes on a number of fronts in 2019, not the least of which is the province double dipping on the MSP and EHT health taxes.

Here in the City of Kamloops, the provisional budget indicates the possibility of a 3.38 percent increase in taxes for homeowners. I do NOT believe, however, that the combined EHT, and final payment for MSP, are the factors greatly impacting that proposed tax increase.

Key financial cost drivers behind the increase, according to the city, include provincially driven programs, additional RCMP members, increased service levels, and inflation and wages.  Here’s the breakdown:

  • 1.1% increase due to new provincial rates and taxes for BC Hydro, ICBC, Employer Health Tax, and the (much maligned) Carbon Tax
  • 1.28% increase due to the addition of three Council-approved RCMP officers, as well as increased services (those would include additional transit hours, and snow clearing and street maintenance) … and a …
  • 1% increase due to inflation and wages. The increase is offset by increasing revenues from overall development and community growth.

And that gives us the rationale for the proposed 3.38 percent tax increase.

Concerned about this, a friend of mine recently asked Kamloops Finance Department the following:

Since the city has been paying MSP for its staff, how is the new employer tax so much higher than the old MSP premiums?  Don’t they cancel each other out to a significant degree?

The response back to him, from Corporate Services director Kathy Humphrey, and Budget and Reporting manager Dave Hallinan (also posted on the city’s website), was:

In 2017, the B.C. government announced that the MSP (Medical Services Plan) premium would be cut by 50 percent starting Jan 1, 2018. As a result, the City cut its budget for MSP by approximately $600,000 which was reflected as a cost savings in the 2018 budget year.

in 2018, the B.C. Government introduced the Employer Health Tax or EHT (which at 1.95%) … will be approximately $200,000 higher than what the City was paying for MSP ($1.4 million dollars vs MSP at $1.2 million dollars).

The City had already reduced the MSP budget by 50 percent, which now means they are still required to pay 50 percent MSP ($600,000) cost, plus the EHT ($1.4 million dollars) for the upcoming budget year.

This makes sense as an acquaintance who knows his way around a calculator, debits, credits, and pretty much all matters financial, more or less confirmed comments made by City Hall: 

“To be fair, I’m not sure that the EHT had been announced when they proposed the first MSP reduction – meaning the City probably thought that their costs would be $600,000 less.  They didn’t set the funds aside because they didn’t know that they would be paying 50 percent of MSP on top of EHT in 2019.”

They continued; “Had they known, maybe they would have put the $600,000 into reserves to cover the MSP for 2019.  Maybe ...”

While unsure what the total payroll for the City would be, they estimated a cost of $80-$100 million … placing EHT costs at approximately $1.6 to $2 million.  This estimate ended up being fairly accurate.

Based on the 2019 there are 771.05 full time equivalents (FTEs) employed in the city. The planned payroll for 2019 is $79.5 million. The total costs of EHT is estimated at $1.4 to $1.5 million for all City Employees (including CUPE, IIAF and Management) said Kathy Humphrey and Dave Hallinan.

The cost of $200,000 for EHT (vs HST) … plus the extra $600 thousand charge for HST demanded by the provincial government during the phase out of MSP costs … should work out to 0.8 million ($800,000) added to the city budget.

The carbon tax, BC Hydro, ICBC increases must work out to and additional $1,208 million on the city budget … and …

Then we have the 1.28 percent increase due to three additional RCMP officers at $600,000, increased services including additional transit hours at $250,000, and snow clearing and street maintenance at $400,000… works out to $1.25 million added to the City budget.

Finally, there’s the City’s proposed one percent increase for inflation and wages – an amount which the City’s budget page indicated was offset by … increased revenues from development and city growth. That wasn’t entirely accurate, though, or perhaps it was improperly explained.

That’s because when asked why the City had included it in the proposed tax increase, when revenues from development and city growth would cover that, I was told that in actual fact only a part ofor a portion of increased civic revenues would cover those increased costs for inflation and wages.

Unfortunately, that makes it pretty difficult to accurately estimate what the increased dollar figure for inflation and wages works out to because of this.  Let’s try though.

The proposed City of Kamloops 2019 budget will be … $109,870,000.

Last years 2018 city budget was … $106,306,000.

Meaning that the proposed 3.38 percent budget increase equals: $3,564,000.

Given the above $800,000, the $1.208 million, and $1.250 million equals $3,258 million, that must mean the increase for wages and inflation comes in at $306,000.

Does the city need an extra $3.6 million in its 2019 budget?  Maybe … maybe not.
Consider the fact Kelowna is smaller in size by a third (212KM vs our 310) with a population that is larger by a third (120,000 people vs our 90,000).  One would have to think the costs to run a city like Kamloops, over the area it covers, would have to be higher.

In Kelowna, residents are facing a tax hike of 4.4 percent (approximately $88 / yr) … meantime we’re looking at an increase of 3.38 percent (approximately $65 / yr).

Is that a BIG tax hike?

When I look at all of the vehicles lined up at McDonald’s, Tim Horton’s and Starbucks drive through windows every day, waiting for their morning jolt of coffee and a breakfast sandwich, I honestly can’t see it.  My credibility as a fiscal conservative may now be shaky, however the reality is that equals less than a couple of coffees, paired up with breakfast sandwich and a hash-brown, every three months.

But you tell me – what do you think?

By all indications, considering the promptness of replies from David Hallinan (manager responsible for Planning and Budgets) along with Corporate Services director Kathy Humphrey, they seem to have no problems answering questions on this year’s budget.

And, with that in mind, there will also be a public budget meeting held on Feb. 7, so if you’re wondering why, and if, we need the above mention increases, show up and ask.

I’m Alan Forseth in Kamloops.  If you have any thoughts on this or anything else you read on the blog, I welcome you to share them below in the Comments Section.

Alan Forseth is a Kamloops resident and former member of the Reform Party of Canada and the B.C. Reform Party, and a past and current member of the BC Conservative Party. His blog is My Thoughts on Politics and More.

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About Mel Rothenburger (6879 Articles)
ArmchairMayor.ca is a forum about Kamloops and the world. It has more than one million views. Mel Rothenburger is the former Editor of The Daily News in Kamloops, B.C. (retiring in 2012), and past mayor of Kamloops (1999-2005). At ArmchairMayor.ca he is the publisher, editor, news editor, city editor, reporter, webmaster, and just about anything else you can think of. He is grateful for the contributions of several local columnists. This blog doesn't require a subscription but gratefully accepts donations to help defray costs.

6 Comments on FORSETH – A look at the proposed 3.38 percent hike for Kamloops taxpayers

  1. Alan Forseth // January 17, 2019 at 10:43 AM // Reply

    I’m just saying that in times of restraint, the costs of things I mentioned could, in my opinion be better spent on repairing roads (rather than patching the same dang potholes year after year) and providing curbs and sidewalks in subdivisions (notably the North Shore, Dallas / Barnhartville, and Rayleigh) who psy taxes and yet have never had them.

    As to round-abouts, I believe the vast majority have no idea how they work, and in places with dinky midget ones, people basically drive over the centre part pretty much driving straight through.

    Beautifying city streets is an admirable idea, but not ahead of proper maintenance of city streets

    • I personally would introduce tolls on all roads in the city. Strategic pricing to lessen the impact on roads with many options to choose from, like frequency (with discounts for trades people and everyone gets a daily freebee) and size of vehicles just right off the top of my head.

  2. The “dime-a-day” sales pitch for the PAC borrowing plan doomed it in the referendum.
    Some seniors do go to Timmy’s or McDonald’s for coffee in the morning but for them, and the rest who can’t afford to do that, I hardly think it’s fair to rob them of that experience in favour of putting the money into a municipal finance pot.
    But, we’ll have the “wow factor” of a glittering parkade on Lansdowne Street.

  3. Great explanation. I don’t feel that the increase is over the top. Every year, wages go up, services either stay the same or increase and living in Kamloops is pretty nice. Yes, it would be nice to have lower taxes, but I wonder what those who want to lower them would be willing to give up for lower taxes. There are costs for everything and I don’t feel we get short-changed.

    • Alan Forseth // January 16, 2019 at 8:46 AM // Reply

      Thanks Brian, and you have posed an excellent question as well. What would we be willing to give up to have lower taxes. Here’s anither thought as well; what would the city be willing to not do, not buy, not participate in that would help decrease our city taxes?

      To be honest, I don’t understand why we spend millions beautifying roadworks with special streetlights, imitation brickwork, and those bumpouts at street corners to slow traffic. There are hundreds of miles of roadwork neefing replacement — not just one bandaid patch on top of the other. Thise kinda of uneccessary costs could be applied to to needed road maintenance instead, including numerous roads requiring curbs and sidewalks.

      Then there are roundabouts, of which new ones seem to crop up daily. Unfortunately the biggest majority of drivers do not know how to use them (DO NOT signal when entering – DO signal when exiting). Hundreds of thousands gabeen spent tearing out roadwirk in intersections, and then installing roundabouts, complete with designer centre pieces of shrubs, flowers and more, all of which need continuous maintenance.

      Those are just a few things that perhaps should have consideration as too their necessity, and if money for those things can be better spent.

      Thoughts anyone?

      • Roundabouts do not crop up daily and they do work in keeping traffic flowing. It is too bad most people cannot navigate them properly. But then there are many other persistent issues related to drivers flaunting the rules of the road, speeding and driving distracted are two serious problems. I personally welcome all the possible solutions to slow traffic down. I personally welcome all possible solutions to decrease traffic and increase walk-ability and cycle-ability. I personally welcome all efforts to make the city as pretty and welcoming as possible. I definitely want my taxes to be spent carefully and in a fully transparent manner. I did make a comment on this thread, which was not published, highlighting some procurement issues which need to be seriously re-examined.

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