INNISFAIL – Town council has passed the 2020 Property Tax Bylaw while concurrently preparing its citizens for the battle ahead against the financial damage caused by the COVID-19 pandemic.
“There will be a larger number of unpaid taxes this year,” said Heather Whymark, the town’s director of corporate services following her presentation of the bylaw at town council’s regular meeting on April 14.
Her comment also followed town council’s approval of the 2020 Property Tax Bylaw that calls for a zero per cent tax increase. However, the council meeting -- which was the first regular one broadcast online during the current pandemic -- also sounded the alarm of the looming fiscal challenges ahead. Namely, there could be a sharp and dramatic loss of tax revenues due to many financially-challenged homeowners unable to pay their tax bills.
To mitigate the anticipated loss of revenues caused by the changing economic climate, Todd Becker, the town’s chief administrative officer, presented council with a full scenario report.
Becker noted the projected provincial unemployment rate of 25 per cent, with a similar rate for anticipated business closures.
He told council that tax collection default traditionally has been about six per cent and administration is anticipating the current one to be at least 10 per cent, which senior staff conceded is on the low side.
Nevertheless, with a 10 per cent scenario Becker said there would be a potential tax revenue loss of $480,000 for residential and $270,084 for non-residential for a total of $750,084, which is just under 10 per cent of the estimated total 2020 tax revenue collection of about $7.7 million.
“We need to be aware of the risks of this pandemic for the Town of Innisfail. We need to minimize the town's operational expenses as much as possible and make service adjustments, and anticipating a worst case scenario, even more than that $750,000,” said Becker, adding administration will come back to council on April 27 with additional projections. “We will provide additional numbers, 20 and 30 per cent, just to give council better indication.
“It’s really unknown. That is the problem with this,” he added. “We need to do the worst case scenario. Obviously 10 per cent, as for the conversation last night, is probably not realistic.”
Whymark also conceded the 10 per cent scenario was low but said the said town could meet the $750,000 but anything higher will have to paid by dipping into town reserves. She said the town has earmarked $640,000 of surplus money in the 2020 budget to go into reserves, money that could be used for programs or services if there is a shortage of tax revenues. Whymark said the town also has an additional $13 million of reserves it has saved over the past several years.
Service level options
In the meantime, Becker also presented council with service level reduction options, along with ones staff has already made.
Council was told line and curb painting for 2020 has been cut. All arena staff have been deployed to the parks department. There will a hiring freeze, including summer seasonal staff, and only priority areas for pothole repairs and road and trail tarring will be done. The projected savings for these service adjustments was not disclosed.
Council was then presented with other areas where additional savings could be made, including service cutbacks to sports field maintenance and parks and green space, which council approved. However, council had issues with a staff recommendation to cutbacks on local plantings.
Administration proposed maintaining hanging baskets in the downtown core but suggested eliminating plantings and just conducting general maintenance on flowerbeds to ensure they are suitable for the future. Council was not presented with a cost-savings figure for these proposed service cuts.
Coun. Jean Barclay said she did not have a problem with the first two cutbacks but disagreed with the horticultural proposal as it could make the town look “unkept”, particularly when citizens will soon be outside more to find additional enjoyment and beauty with the warmer spring weather.
“Having a nice looking town with flowers is part of that, and a piece of that is for people’s well being,” she said. “It’s not just aesthetics.” She pointed out the town has a garden club and has many volunteers who would be willing to step up and help out with the town’s planters.
“We have lots of people who enjoy doing that kind of thing. They may want to help out for the summer,” said Barclay, adding she wants more analysis done with this issue, and the planters fully maintained if possible.
Becker said he would have staff break down the costs of maintaining the full horticulture program and report back to council by the end of the month. He cautioned, however, that if council wanted to maintain services it must be prepared to pay for them through town reserves.
Tax payment deadlines
Meanwhile, Whymark told council in her 2020 Property Tax Bylaw report, which was unanimously approved by council, that assessment and taxation notices will be sent out to citizens and businesses by April 30. She said taxes should be paid on or before the June 30 deadline.
Whymark said the town is receiving a standard education tax requisition from the province with the same timelines. Homeowners, who will see a small increase in school taxes, will still have to pay on time but non-residential property owners will have the option to defer payment of the school tax portion for six months.
Whymark’s report noted that no penalties to property owners would be applied in July or September to any outstanding tax accounts. Penalties will be generated on Jan. 1, 2021. That levy will be 12 per cent on all outstanding balances.
“I think we are doing the best we can to help the citizens. Unfortunately, does that help them pay their taxes?’’’ said Whymark, noting the town is also not charging penalties on utility bills until the end of June. “No, but at least it gives them a breather of time to recoup should things progress and try to get back to normalcy. We understand it could take quite a few months for people to get back on their feet.”
