Sidney council signed off on a report recommending a “cautious and measured approach” spending a provincial grant worth more than $2.75 million. The report also raised the possibility of unspecified tax increases in 2021 against the backdrop of “uncertainty around the financial impacts of COVID-19.”
The report prepared by Andrew Hicik, Sidney’s director of corporate services, makes four recommendations around the use of the funds that the municipality received under a federal-provincial designed to help communities recover from the effects of COVID-19.
Of the four recommendations, the first two appear to be more substantial, with Hicik recommending the municipality allocate $650,000 to make up for lost revenues and costs incurred in 2020.
The second recommendation calls on council to “tentatively set aside” $550,000 of the grant to maintain the current level of tax reductions for 2021.
This spring Sidney reversed plans to increase general property tax by 1.79 per cent as a response to the effects of COVID-19. They also cut taxes for business properties by 10 per cent. The cuts have become the starting rates for 2021 budget discussions, which also loom large in Hicik’s report.
He said that this recommendation supplies a “solid starting point” for crafting the 2021 budget. “Knowing that the lost tax revenue will not have to be made up immediately will allow for a measure of continuing tax relief,” he said.
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But Hicik’s report also reveals a cautionary note, when he notes that the municipality might need to use more of the grant because the 2021 budget will “likely” require a higher funding level. With 2021 budget yet to be determined, it is “possible that the additional funding would be made up of a combination of tax increases and (grant) funds.”
Hicik added additional recommendations will come forward during the budget process.
The two other recommendations call on council to set aside the remaining grant funds — almost $1.56 million — for 2021 budget discussions.
RELATED: Sidney council makes 2020 business tax cuts permanent heading into 2021
Hicik also recommends the municipality hold off on reviewing its overall tax policies until the 2021 tax rates are set.
“Unfortunately, the uncertainty around the financial impacts of COVID-19 is adding an additional layer of complexity to an already difficult topic,” he said. “Given that [council] has made the important commitment to use 2020 tax rates and multiples as a starting point for 2021 — as well as the fact that we now have access to the [grant] — staff are recommending that the policy review be put on hold until next spring.”
The Canada-BC Safe Restart Agreement distributed $425 million in direct grants to local governments across British Columbia to deal with the impacts of COVID-19, as well as cover safe reopening and emergency response costs.
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