Langford council looking to reduce tax impact through budget revisions

In its latest round of deliberations on its five-year financial plan, council took a fine-toothed comb to budget line items and was looking for ways to reduce the tax impact on residents. On Feb. 20, council had lots of questions for its finance director Mike Dillibeau as it looked to pare spending.  

The draft plan initially included a proposed 14.51% tax increase for 2025, with projected annual increases of 11.56%, 6.27%, 5.18%, and 5.11% over the next four years. The proposed 14.51% increase would result in a roughly $30 per month increase in municipal property taxes for a representative household.

Director of finance Michael Dillibeau pointed out that any tax reduction in one year means a tax increase in a future year—but not at a 1:1 ratio. Instead, it is magnified based on compounded impacts. “Even if we collect exactly the same amount, we are adding 1.1% to the future's tax increase. And that has an accumulative effect,” he said. “Only a budget item that is eliminated is a true savings”

Langford’s 2024 residential property tax rate of $4,472 came in higher than Sooke’s ($4,242) and Metchosin’s ($4,380) but lower than Colwood’s at $4,851 and View Royal at $4,986.

Key items in the Draft Five-Year Financial Plan discussed included:

·    RCMP Contract (contract increases and five additional members): 4.00%

·    E-Comm Police Dispatch: 2.36%

·    Fire Department Staffing (per Master Plan): 1.85%

In 2020, area municipalities including Colwood, Ladysmith, Langford, North Cowichan, North Saanich, Sidney, Sooke, Metchosin, and View Royal  were informed of the pending shift to 100% of the costs for RCMP E-Comm 9-1-1 dispatch calls being on their municipal budgets.

In 2021, the cost split in all dispatch jurisdictions in BC was 70:30—province 70%, feds 30% It is this split that is set to expire next year expressly in the South Vancouver Island Dispatch regions.

Last month, the province announced that the three-year delay in the transfer of 100% of those costs was over and that municipalities should expect to absorb all 9-1-1 dispatch costs into their 2025 budgets.

Coun. Lillian Szpak suggested that some municipalities are deferring the E-Comm cost and asked the financial director if Langford could do the same.

The proposed projected budget impact of the E-Comms download is $1.4M, representing a 2.73% tax increase for 2025. In 2026 and beyond, the budget impact is approximately $2.1M annually (additional 1.25% tax increase in 2026).

“It’s something you could consider. I think it would send a message to the province that download isn’t appropriate but it’s something you need to think very carefully about because at the end of the day, we may have to pay for it,” said Dillibeau.

Warning that her comments were coming without wishing to be disrespectful to the province, Szpak suggested deferring the cost would show residents the city was standing firm on increased spending. “Without E-Comm, it shows we have been consistent with holding the line on our budget to where we said we would.” 

Coun Keith Yachucha reminded council thst5 a letter was sent by the 10 affected mayors last week and they have requested a meeting with the premier. “The story isn’t finished in that regard and we may not have to pay it,” he said.

Dilibeau suggested that whatever the outcome, the E-Comms cost could always be added back into the budget at a later date. 

When he was asked why paying for 5 police officers is more expensive than 9 firefighters, Dillibeau explained that Fire Department members are charged and paid for as city staff, so the increase is just wages and benefits whereas an RCMP officer comes with a host of other line items for each authorized member that bring those costs to $230K per officer.

The impact in 2025 for adding 9 firefighters is approximately $1M, representing a 1.85% tax increase.

The committee reviewed other key items from the operating budget and approved several resolutions that would reduce the proposed tax increase to 11%. 

The motions included:

-that council direct staff to reduce the increase in the debt payment (internal borrowing) to $250K from the proposed $750K, for a total payment of $1M in 2025. The city has occasionally borrowed internally over the last 25-years for the acquisition of land and to fund projects that have gone over budget with the intention of repaying those funds in future years.

-that council direct staff to look for non-taxation revenue sources to pay the Langford Aquatic Centre rent amount. The city decided to buy the property on Dec. 16. The project will otherwise represent roughly a 1.75% tax increase per year from 2025 to 2028.

-that council direct staff to restructure the Capital Budget by identifying other funding sources or deferral of Capital Budget items to ensure the 2025 Capital Budget is not funded through property taxation increases.

-that council direct staff to decrease the Royal Roads Innovation Studio budget by 50% for 2025  (as the new downtown campus is not yet open).

- that council direct staff to remove the E-bike rebate from the 2025 budget and add it to 2026 and 2027 budgets instead.

-that council direct staff to remove its travel and training budget 25% for the 2025 budget year

-that council direct staff to remove the E-Comm item from the budget, only to be added back in, upon adoption of the 2025-2029 five-year financial plan, if the provincial government continues to download this expense to the local governments following their review (as Dillibeau suggested)

-that council direct staff to bring back options for council to endorse a tax increase of 11%.

With respect to capital budget, Dillibeau stated there was no property tax increase impact on decisions made around the use of reserves for capital items and suggested it might be worth council looking at capital items from the perspective of where they were funded. 

The city is allowed to set aside funds in reserves for specific purposes. Once put into reserve, the funds may then be used only for the purpose outlined for that reserve.

He pointed to four applicable reserve funds where that may apply, including:

• the capital works reserve that is funded entirely by casino revenue– the draft budget would use up all but 90K

• the general amenity reserve fund that would be reduced to 230K

• the surplus amenity fund that would be reduced to $266K

• and the gas tax balance that would get down to $450K, based on the current draft of the financial plan.

The committee requested that staff review the motions as they apply to key budget items for potential reductions and present a report at an upcoming Committee of the Whole meeting, on March 4, 7:00 p.m.

The updated timeline to finalizing the budget

• March 3: Council will make deliberations on the plan

• April 22: Council will consider 1st, 2nd, &3rd readings of the plan

• May 5: Council will consider adopting the five-year plan through its Financial Plan and 2025 Tax Rates Bylaw.

• May 15: Represents the final deadline by which Langford must adopt its Five-Year Financial Plan to be in compliance with the Community Charter.