Provisional 2019 Budget — Let's Work Together!

The RDN provisional budget was received by the Board on December 4th 2018.

Budget background

The Regional District of Nanaimo is service oriented and collects taxes for those services which are delivered. So for example, we do not pay taxes towards maintenance or upkeep of Ravensong Aquatic Centre in Parksville, but we do pay taxes toward the Nanaimo Aquatic Centre through the Southern Community Recreation line item. Similarly, we don’t pay taxes towards the RDN Transit system, and other Regional Areas don’t fund our Gabriola Transit System, GERTIE. Another example is the difference between Regional and Community Parks. Costs for Regional Parks are shared amongst all the RDN regions whereas Community Parks are paid for and maintained solely by the community(ies) that receive the benefit. Other services that are entirely funded by Area B include the Gabriola Museum, Gabriola Arts Council, Gabriola Taxi Saver, and the Gabriola Emergency Wharf.

The RDN funds 106 specific services. Each is treated as its own entity and is taxed and tracked separately. Any surplus stays within that service. For example, taxes are collected for the Gabriola Emergency Wharf. If the service area had a surplus at the end of 2018, those funds could not be used for funding for a community park; they would stay within the Gabriola Emergency Wharf budget and be used to offset taxes for the following year, or used to build a reserve in the fund for some future need.

At the most recent RDN Board meeting on December 4th, the provisional 2019 budget was received for information. The budgeting process began in spring 2018 and continued through the year based on Board direction. The provisional 2019 budget has an increase in total tax requisition for Area B of 13.7% over 2018. When adjusting for anticipated non-market growth (ie increasing population), the average household in Area B is expected to pay 11% more tax in 2019 compared to 2018, according to the provisional budget. This means that the average household (valued at $353,415 in 2018 assessment) would pay $319.67 in total, which is $39 more in tax in 2019 than 2018.

The entire provisional budget is available for you to review at https://www.rdn.bc.ca/dms/documents/rdn-financial-documents/2019-provisional-budget/2019-provisional-budget-summaries.pdf . A summary is below, as well as some information about the next steps in the budget planning process.

What are the next steps in the budget process?

There is a Committee of the Whole meeting on January 8th 2019 where the Board will adjust the budget, and then the 2019 budget will be finalized on January 22nd. The RDN’s statutory requirements specify that the budget be placed within a five-year financial plan which must be approved by the end of March. The five-year financial plan will be presented on February 12th. On February 26th the five-year bylaw goes forward. Note that all RDN Board meetings are open to the public. I am reviewing the budget to understand the line item costs and looking for efficiencies.

Why is there a tax increase?

The costs of living are increasing, which has influenced the predicted cost of a number of line items including RDN staff wages (2% increase), the new BC Health Tax that employers are required to pay beginning in 2019 (2.925% of payroll), and anticipated increases in gas (8.1%), and diesel (1.8%) costs.

The largest portion of the Area B tax increase in the 2019 provisional budget ($123,900 of $189,396) is a tax to support grant applications to develop Phase 2 of Huxley Park. These grants represent an exceptional opportunity to leverage approximately 73% of the total project costs from the provincial and federal governments. This funding would be sufficient to complete the skatepark, which islanders have been working toward for more than a decade, as well as a paved parking area and upgraded electrical system. All of these are elements of the approved park master plan. To be able to apply for these grants, the RDN needs to demonstrate Board support for providing the remaining 27% of the project budget. Through the community’s outstanding fundraising efforts and an amount from the RDN park reserve fund, the additional amount that needs to be raised through taxes is approximately 14% of the total project budget. This is a one-time budget demand to support the grant applications for Phase 2 capital costs.

How does our tax increase of 11%/$39 compare to other areas?

The tax increases in the provisional budget range across the Regional District from 0.7% for Lantzville (whose residents also pay municipal taxes), up to 11.6% in Electoral Area G. Although the 11% increase is relatively high compared to other areas, the absolute increase ($39 for an average household) is lower than in some other areas, because our base taxes are lower. For example, following the provisional budget, an average household in Qualicum Beach (whose residents also pay taxes to the Town of Qualicum Beach), will see a 7.5% increase, which will result in a $52 average increase per household. The average home in Electoral Area E with a 7.4% increase would pay $49 extra in taxes. The average household in Electoral Area F would pay $57 more in taxes, and in Electoral Area G would pay $65 more in taxes.

How is the budget likely to change for Area B before the five-year bylaw is finalised?

The provisional budget is based on numerous assumptions such as regional growth rate and housing assessments, as well as assumptions about the amount to be transferred to outside agencies such as the Vancouver Island Regional Library, the 911/Fire Dispatch agencies, and to Nanaimo for recreation facilities (those amounts are dependent on projected growth and tax changes for other agencies). In addition, final numbers regarding surplus budgets in specific services, or interest earned, is not yet available. These numbers likely won’t be finalized until February 12th.

There are several changes that will occur at the January 8th meeting:

Gabriola transit contribution (GERTIE)
GERTIE will be requesting a 1% increase in their funding. The line item will increase to $137,078
Community Parks
The amount in the budget for parks was based on an assumption of $30,000 raised by our community groups for the skatepark, but as of the latest update, the groups have raised significantly more. Specifically, the parks budget line item was initially based on the following calculation:

Note that the more money fundraised, the lower the tax levy will need to be. For example, the skatepark group has raised over $42,000 to date, which will reduce the amount needed to be raised through taxes. The amount raised as of January 8th will determine the tax funding required.

I will be bringing a motion to the January 8th meeting to divide the tax levy for Phase 2 of the Huxley Skatepark over 2 years – 2019 and 2020, which will reduce the 2019 tax requirement and defer the remainder to 2020.

Port Theatre/Cultural Centre
The Gabriola Museum has a funding agreement under this line item for $12,000 in funding per year. They will be requesting a $4,000 increase in their funding, which will increase the line item to $31,827 ($15,827 for the Port Theatre and $16,000 for the Museum).

Why split the tax increase across two years?

As stated above, I will be bringing a motion forward to split the tax between 2019 and 2020. Splitting the tax has numerous advantages:

It will spread the tax amount out so that it’s less expensive each year
It will provide community groups additional time to fundraise, which could further lower the tax amount in 2020
It will provide additional time to identify potential in-kind donors (e.g., site prep, cement provider etc.), which could further reduce the 2020 tax amount

What will be the tax requirement for 2020 if the grant is received?

The tax amount for 2020 will be the remaining amount (half of the operation funded) less any additional funding obtained through community donations, in-kind donations, or RDN funding. Once Phase 2 is complete there will be operating/maintenance costs for the park on an ongoing basis, as is the case for all parks with infrastructure.

What happens if neither of the grants for Huxley Park Phase 2 are received?

If the grant for Huxley Park is not received, then the amount collected in taxes to date will remain in park reserves to be used for a future community park service (as mentioned above, the money collected for a community park service must stay within the community park line item). We would then continue to look for opportunities to move forward with Phase 2 of Huxley Park.

What has the process of community consultation been for Huxley Park?

The Huxley Park plan has moved through an extensive series of community engagement opportunities since 2013 through public meetings, online surveys, Parks and Open Spaces Committee (POSAC) meetings, and RDN Board meetings as summarized below: