FILE PHOTO

(ROB MUNRO / iNFOnews.ca)

WEST KELOWNA - Jim Zaffino was only following orders when he presented a draft budget calling for a three per cent tax hike.

“If it looks like I’m trying to sell something more than a three per cent tax increase, I am,” West Kelowna's chief administrative officer told council yesterday, Dec. 11 during a budget briefing. “This is a three per cent budget as instructed by council but there is a what if? What if four per cent? What if five per cent? And I’m reintroducing a franchise fee.”

Zaffino explained that the city inherited old infrastructure when it incorporated in 2007, some of which is 50 or 60 years old and some of which was not built properly.

“Every time we go into a road, every time we go into something, we find something wrong with it,” he said. “Somewhere down the line, someone took a shortcut. Now we have to pay for that.”

“We have a couple of issues we’re dealing with right now that someone took a shortcut. If the shortcut wasn’t there, it would have cost us nothing. That’s now going to cost us $15,000. It’s not common in other municipalities but it is common here.”

Zaffino urged council to either increase taxes or impose a franchise fee on utility companies in order to build reserve funds to replace aging infrastructure without incurring large debts. If the city gets into debt financing, future tax increases will have to go to paying down that debt rather than expanding services or infrastructure, he said.

Incumbent councillors Rick DeJong and Doug Findlater spoke strongly against the franchise fee. They helped defeat that proposal in June.

“The franchise fee is nothing less than a hidden tax grab,” DeJong said. “If we need more money we need to look at the three per cent tax and maybe increase it.”

West Kelowna is the only city in B.C. that does not charge a fee to natural gas utilities for the use of city land for their services, Zaffino explained.

Utilities pay a lower tax rate, which boosts their bottom line. But that’s on the back of taxpayers, he said, although the cost of franchise fees is usually passed on to the customers so, either way, residents pay.

A gas franchise fee would bring in an estimated $450,000 a year – or the equivalent of more than one per cent in property taxes. An electrical franchise fee would bring in more than $1 million a year, Zaffino said, noting that no other city in B.C. collects that kind of franshise fee.

While DeJong and Findlater were adamantly opposed to the natural gas franchise fee, newcomer Stephen Johnson, who topped the polls, asked for more information about what the taxpayer benefit would be.

Zaffino will bring a more detailed report on the fee when council sits down to fully debate its budget on Jan. 15. That will be followed by a public input session Jan. 30.

When West Kelowna incorporated, it was expected that tax increases of five per cent would be needed each year, Zaffino said. That has proven to be true, but the actual tax hit to residents has been lower than that due to new taxes coming from growth.

For 2019, Zaffino has given a conservative estimate of 2.4 per cent due to growth but expects it to be closer to 2.7 per cent.

By 2020, he expects that rate to drop to about 1.3 per cent because of a slowdown in growth caused by the provincial government’s speculation tax, he said. That will put pressure on council to come up with the shortfall some other way.

A slowing in new construction will also cut into civic revenues for things like permit fees and development cost charges, he said.

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