Preliminary budget: 4 percent tax increase on the cards for Fernie

Fernie councillors have opted for a 4 percent tax increase for 2021 to help bridge a $546,755 budget deficit, which had been revised down following further review.

In a marathon special council meeting on Tuesday night to discuss preliminary budget proposals, councillors debated the finer points of giving community groups with operational grants from the city a funding haircut, and what sort of tax increase was needed to bring the city budget to the magic number - being a $0 deficit, and a balanced budget.

Mayor and council voted 6-1 to support the tax increase paired with a 20 percent reduction in operating grants allocated to the city’s community partners - with the Senior’s Drop in Centre and the Fernie Arts Council taking the biggest hits.

The Seniors Drop in Centre would see its operating grant from the city reduced to $24,000 from an originally slated $30,000, while the Arts Centre drops to $36,298 from $46,274. The Fernie Museum would also get an operational grant in the preliminary budget, though it would also be trimmed 20 percent from what it would otherwise receive, leaving it with $43,046.

The Chamber of Commerce (operating the Visitor Information Centre) and the Heritage Library have operating grants that are locked down through multi-year contracts, so have seen no reduction.

Following previous councillor discussion, the option of reducing core municipal services had already been taken off the table, with options presented on Tuesday limited to tax increases, reductions in operating grants to community partners and a reductions in funds transferred to reserves - along with continued reviews and efficiencies.

Other particulars of the preliminary budget that received majority support included a reduction in transfers to reserves (which are used for asset renewal), a reduction in police expense due to the local detachment being short-staffed, and the funding of patching and paving contracts coming from gas tax funds.

Councillors also added an additional dust control measure, which added $13,500 to the budget.

Kyle Hamilton was the only councillor to vote against the 4 percent tax increase / 20 percent funding cut for community group mix, saying that he believed the tax increase was not enough, and was akin to ‘kicking the can down the road’ given that the issues that were brought to light with city finances and a lagging tax rate were not going anywhere soon.

Mayor Ange Qualizza voted to support the proposed measures, but said she was “almost opposed” as she too was concurred it was not enough.

Hamilton had previously talked about the possibility of ‘tearing the band-aid off’ and going for a much higher tax increase while limiting cuts to community groups and striving to fully replenish city reserves in order to get the city’s house in order, but received no backing from other councillors, except from Mayor Qualizza, although she regularly brought the community groups grants back into the conversation, arguing that they shouldn’t be exempted from cuts given the wide-ranging impact of the pandemic and the services the city itself had to wind back early in 2020.

Instead, the majority of council’s opinion congealed around a modest tax increase (with many noting it could be seen as a correction of sorts from the zero percent increase last year), while the level of cuts to community groups ranged from 20 to 30 percent. The 30 percent cut was deemed too deep given many of the groups were three months into their plans for 2021 already, so the 20 percent option was chosen.

For the entire deficit to have been covered by a tax increase with no cuts to community groups, and full allocations to reserves, the city would need to increase taxes by 8.5 percent.

The preliminary budget will now go out for public comment, with comments received coming back to council for review on April 8.

READ MORE: Fernie’s budget comes under the microscope