What is in a number? Sometimes it is difficult to put things into perspective if we do not truly look into their impact on us individually, especially when it comes to money.
In the last two articles, I gave you some indication of the general meaning of numbers. I explained the true meaning of a no-tax increase, the impact of a tax increase on Lake Country opposed to other cities such as Kelowna, the weight of cost of goods and services on the District, the wish for taxpayers to keep, if not increase level of services, the high cost of policing, etc. Let’s go a bit deeper and talk about some of the initial decisions Council has made so far.
THE PROCESS:
The actual budget process revolves around numbers and plans. The deliberations on those numbers and plans are solidified into a bylaw which includes the budget projections of a municipality for the ensuing five (5) years. This year, Council will approve a 5-Year Financial Plan bylaw for the period 2020 to 2024 inclusive. A bylaw, in local government, must pass four (4) readings to be approved. Council gave first (1st) reading to the bylaw in December 2019 with a recommended 6.03% tax increase. 2nd and 3rd readings are scheduled for February 20th after community engagement sessions throughout Lake Country and the four (4) wards. The fourth reading is scheduled for March 3rd. (engagement details can be found at http://www.lakecountry.bc.ca).
PERCENTAGE – A DISTORTED PERSPECTIVE:
One common mistake people make is seeing the percentage of a tax increase as a bad thing. To some a 6.03% is a huge increase. The reason it’s perceived as a bad thing is because people assume the percentage is applied to their tax bill. The reality is the percentage is applied to the overall budget and then applied to the individual taxpayer based on a multiplier established on the property’s class/classification. One of the classes is Residential, which is the largest tax base in Lake Country, but there are others, for instance Business (there are five (5) active classes of taxation in Lake Country). This means that if your tax bill from last year was $X, the increase will not be $X+6.03% but rather $X + portion of the overall increase based on the multiplier for your property classification and the difference between the percentage change in assessment on your property compared to the change in assessment on the whole class. Sound complicated? It is! It’s easier to understand what this means in terms of actual dollars.
THE HARD DOLLAR PERSPECTIVE:
What is a 1% tax increase on a residential property? A 1% tax increase on a $100,000 of assessed value for a residential property is $2.75 annually. The proposed annual increase in Lake Country for 2020 (6.03%) would be $16.58 per $100,000 of assessed value for a residential property. An average home in Lake Country is assessed at approximately $650,000 meaning the annual increase on a property of that value would be a total of $107.77. This equates to $2.07 a week or about 30 cents a day for the average home owner. All municipal services that everyone benefits from are covered in the budget: safety and protection of property and people, parks and recreation, transportation, transit, roads, and so on. Compare this to other services you receive from other companies, corporations and governments. Remember, the federal government takes and spends 52% of your overall taxes and the provincial government takes and spends 40% of your overall taxes. Local governments provide you the best value for money on the tax economy of scale at a cost of less than a weekly cup of fancy coffee.
As I continue to explain the budget in Lake Country I truly hope, as we go into the details of the specifics of Lake Country’s budget deliberations in the next couple of articles, that you keep in mind the information outlined in these three articles.
Budgeting is not an easy exercise as we need to balance a myriad of details, plans, projects, and interests. Keeping a good perspective on the budget and community members being engaged will help the community continue to be a great place to live.
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ASD Innovation 
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