Fernie’s budget comes under the microscope

City of Fernie councillors have been presented with a handful of options to think about when it comes to how the city will tackle a projected $682,803 deficit in its financial plans.

The city is currently estimating that if it maintained a ‘status quo’ budget with all services and expenses at the same level of 2020, with a zero percent property tax increase (as it was in 2020), the city would have a deficit of $682,803.

According to financial contractor Linda Tynan, the City of Fernie has been operating in deficit for at least three years, with budget issues being hidden by poor financial records and issues across the organization’s revenues and expenditures that have been compounding-year-on-year. The issues were uncovered by a line-by-line assessment of it’s financial situation.

Under provincial law, all local governments must operate a balanced budget.

Next Tuesday, March 23, City of Fernie councillors will be deliberating on how to make up the deficit, which must be addressed.

Options are limited, ranging from a property tax increase, reduced service levels and funding or a blended approach.

At a council meeting on Thursday March 17, Tynan said that by her calculations, funding the entire shortfall through a tax increase would require a tax hike of approximately 9.5 per cent.

She added that such a large increase could be unrealistic, given the budget was intended to be cognizant of the existing financial impact of the COVID-19 pandemic on local property owners.

A blended approach was also presented as an option, with a moderate tax increase, a reduction in transfers of funds to city reserves, continued staff review of further cost reductions and moves to alert ‘external service providers’ (community partnership groups that receive operating grants) that their funding will be under the microscope headed into 2022 (but remain as is in 2021).

A third approach of a cut in services and funding is also on the table, but Tynan, who said that this option was “pretty drastic” said that given it was mid-March, any reductions in services wouldn’t see a full benefit on the balance sheet as the year was almost a quarter over. She also added that community groups that received funding were already operating under the assumption of a 2021 operating grant agreement being honored, making changes to their funding problematic.

Further options based on councillor feedback are also on the table.

While councillors will be considering the budget at a special meeting of council next Tuesday (March 23), Mayor Qualizza and some councillors indicated some preferences at the Thursday meeting, giving hints as to where they were looking for solutions.

Councillors Nixon, Pulsifer and McIsaac appeared to be leaning towards a blended approach, with McIsaac noting that the community shouldn’t be surprised by a modest tax increase based on the zero per cent increase last year. Nixon said he liked the blended approach, while Pulsifer requested information on comparisons of impacts on the average Fernie household, and said that he “didn’t know a single person that doesn’t have a pretty big bone to pick with B.C. Assessment.”

(B.C. Assessment determined that average assessed property values in Fernie increased 10 per cent for 2021).

Mayor Qualizza talked at length about the financial impacts on the community, saying it was not viable to place the full burden of the deficit on ratepayers.

“Our most vulnerable parts of our community are going to show up,” she said.

Qualizza also held community partnerships with the city in the light, pushing back on Tynan’s comments that reducing their funding a quarter of the way into the financial year would be a surprise, noting that everyone knew municipalities around Canada were feeling financial pressures.

Under the current draft budget, the city has some $450,000 in operating grants earmarked for community partnerships, which are with organizations such as the Fernie Chamber of Commerce to operate the Visitor Information Centre, the Senior Citizens Club of Fernie and District, the Fernie Heritage Library and the Fernie and District Arts Council to operate the Arts Station. The Fernie and District Historical Society currently does not have a funding agreement with the city to operate the Fernie Museum.

The draft budget will be out for public comment after next Tuesday, with public comment being considered at a next special meeting of council on April 8.

READ MORE: Fernie dives into budget concerns