Deep Dive: The Tax Question
Point Form summary
- Our property taxes pay for services and infrastructure we rely on every day.
- Affordability matters. Council should treat every tax increase seriously and look for savings before asking residents for more.
- Keeping taxes artificially low can also be costly if we allow roads, pipes and buildings to deteriorate.
- We should not normally use one-time grants and reserves to pay for permanent services.
- Borrowing can be responsible for major, long-lasting projects, but we must understand the full cost.
- New development should pay its fair share of the costs created by growth.
- Budget decisions should consider who pays, who benefits and whether the result will remain affordable over time.
- My goal would not be the lowest possible tax increase in any single year. It would be reliable services, responsible spending and a financially healthy city over the long term.
Nobody enjoys paying property taxes. For many households and businesses, even a modest increase adds to an already difficult mix of housing, food, transportation and other costs.
Council must take that seriously. But it also has a responsibility to provide the services and infrastructure that make Vernon a safe, healthy and enjoyable place to live.
Finding the right balance requires more than promising to keep taxes low or assuming that every proposed expense is necessary.
Our options for increasing revenue are limited
B.C. municipalities cannot charge income or sales taxes. We rely mainly on property taxes, along with utility charges, user fees, grants, developer contributions, investment income and other smaller sources.
In Vernon, property taxes provide about half of the City’s total budgeted revenue. Some other income sources are also dependable. Sewer, water and garbage charges, for example, help pay for those particular services. However, grants and developer contributions are normally tied to specific purposes, while income from reserve investments can rise or fall.
As a result, property tax is our main source of revenue that is both reliable and flexible. When ongoing costs increase and no lasting savings or other revenues are available, our choices are generally to raise taxes or reduce services.
Unlike provincial or federal governments, a city cannot simply plan to run an operating deficit.
Affordability must matter
Individual homeowners’ abilities to absorb tax increases varies considerably.
Property owners face increases directly. Renters may not receive a property-tax bill, but rising ownership costs can contribute to pressure on rents over time. Local businesses may also have less ability to absorb additional costs than their property values suggest.
Before approving a tax increase, I would want to know:
- Is the spending necessary?
- Can we achieve the same result more efficiently?
- Is another source of funding available?
- If we do not spend the money now, what will the future cost be?
- What will the increase mean for households and local businesses?
Tax increases should never be automatic. Each one must be justified.
Low taxes today can create larger bills tomorrow
Being careful with municipal taxes does not always mean spending the least amount possible in a given year.
Our roads, pipes, buildings and other public assets wear out. If we postpone regular maintenance and replacement, the problem does not disappear; it often becomes more expensive. The same is true of preparing for wildfire, flooding and other known risks. Spending wisely before a crisis can be far less costly than repairing the damage afterward.
Keeping taxes artificially low by delaying necessary work may look responsible in the short term. In reality, it can pass a larger bill to our children.
Strong financial management means knowing what the City owns, what condition it is in, when it will need to be repaired or replaced and how we will pay for that work. It also means setting aside money regularly rather than waiting for something to fail and responding in an emergency.
Use the right money for the right purpose
Not every source of money should be used in the same way.
Most grants are worth pursuing, especially for major projects. But a grant is not free money if it requires us to contribute funds we do not have, build something we cannot afford to operate or take on future maintenance and replacement costs that are not sustainable. Looked at this way, there are some gifts we may not be able to afford.
Reserves are important for emergencies, planned projects and unusual costs. They can help smooth a sudden increase, but using them repeatedly to pay for permanent services only delays an inevitable tax increase or service cut.
Borrowing can sometimes be the responsible choice. A facility that will serve our community for decades may not need to be paid for entirely by today’s taxpayers. Spreading the cost over its useful life can be fair. But Council must clearly understand the interest costs, the effect on future budgets and the ongoing cost of operating and maintaining what we build.
Growth should strengthen the tax base
Growth normally brings new tax revenue, but it also adds service and infrastructure costs.
New development should pay its fair share of the costs it creates, including the long-term expense of operating, maintaining and eventually replacing new roads, pipes and parks.
Compact growth within already serviced areas generally makes better financial sense than sprawl. It allows more homes and businesses to share infrastructure we already have instead of requiring taxpayers to extend and maintain new infrastructure over a larger area.
A growing tax base is helpful only if the cost of serving that growth is not greater than the revenue it brings in.
Spending reflects our priorities
Every budget, including Vernon’s, reflects what we value.
Council must fund essential services such as roads, fire protection, policing, parks and infrastructure. It must also decide what level of service we expect and are willing to pay for.
Reducing spending can sometimes be the right choice. Programs may have outlived their purpose, work may be duplicated and new technology may create efficiencies. We should explore those opportunities.
But cuts also have consequences. A lower budget may mean slower snow clearing, fewer park improvements, reduced recreation hours or postponed road work. Council should be honest about those effects rather than presenting every cut as a painless efficiency.
The balance I would seek
I cannot promise to avoid every tax increase. Costs rise, infrastructure ages and community needs change. In my view, a prudent councillor should not make a promise that may require us to neglect services or pass hidden costs on to the future.
What I can promise is to approach every budget with care.
I will look for efficiencies, question assumptions and consider affordability. I will also look beyond a single budget year. I will support spending when the need is clear, the cost is reasonable and delaying it would leave Vernon worse off.
Our goal should not be the lowest possible tax increase this year. It should be a city that provides good value, remains affordable and meets its responsibilities today without leaving an unfair burden for tomorrow.