City in a good financial position to face future budget pressures

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City in a good financial position to face future budget pressures

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Adam Reaburnhttps://energeticcity.ca/
Adam moved to Fort St. John in 2004 and he now owns both Moose FM and Energeticcity.ca

FORT ST. JOHN, B.C. – The City of Fort St. John says it’s in a good financial position even as it expects to lose over $2.47 million in revenue over the next two years.

While overall, the City is in a healthy financial position, changes in the last two years, like the pandemic, increased RCMP costs, and the City’s largest tax payer’s closing its doors, could mean the City will have to make changes to balance the 2021 and 2022 budgets.

In 2019, the Peace Valley OSB Mill announced it would close. This property alone brought in $800,000 in tax revenue each year. The City will know later this fall if it will receive that revenue in the next year.

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On top of this, the City will have to pay over $400,000 in RCMP retirement benefits, following recent settlements made by the Provincial and Federal Governments on longstanding disputes. The City may have to pay this amount and other increased RCMP costs in either 2020 or 2021.

The pandemic may also affect the budget. The City’s property tax deadline was moved to October 1, from July 1. In July, the City reported that there was $17 million in taxes remaining to be paid. Last year, that number sat at $8 million, most of which was collected over the remainder of the calendar year. It won’t be known until October 2 how much will be outstanding for 2020. Once the City knows the amount, they plan to use reserve funds to balance the 2020 budget.

Over the last four years, the City’s revenue has remained the same, while the property tax base has dropped due to changes in the local economy. During that time, the City has run a surplus while it’s employee costs have increased by 2.6 percent and inflation averaged 1.8 percent.

During a presentation to Fort St. John City Council, General Manager of Corporate Services, David Joy said Fort St. John has one of the lowest tax rates in B.C. “We have been strong with our financial health, we have minimized the tax burden on our property owners. This is a message that doesn’t normally get out but needs to be said.”

Joy says the City can use a combination of strategies to reduce the effect of any revenue change on taxpayers. Those strategies include increasing non-tax revenues, hold the line on expenses and use reserve funds to stabilize the budget. Joy went onto say, “At some point, we have to realize that we are due for some tax revenue increases.”

Other items that could affect the budget in 2021 and beyond include:

Return on Investment – This could be approximately $500,000 as the City spends capital reserves.

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Fire Services Overtime – This will be approximately $400,000. Due to a budgeting error in 2019, overtime amounts for the Fire Department were not accounted for. Overall, fire department overtime costs have dropped from $1 million to $400,000 each year.

Fire Services Agreements – Fire service agreements with two groups participating in the construction of Site C have hired the City of Fort St. John Fire Department for fire services. Those contracts are worth $223,000. 

Download the full presentation here, or watch the presentation below.

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