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Growth stabilization reserve gets council go-ahead

By: Victoria Paterson

  |  Posted: Wednesday, Mar 05, 2014 06:00 am

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The city’s new policy on how new assessment growth revenues are handled in the budget came under fire at Monday’s city council meeting.

While the standing committee on finance, which is comprised of council, had recommended council approve the recommended policy, Coun. Sheena Hughes and Coun. Cam MacKay took the opportunity to try to talk their colleagues out of it.

The new assessment growth policy will split tax revenue from new assessment growth between funding growth initiatives and offsetting base adjustments.

About 75 per cent of the new assessment funds would go to fund growth initiatives while 25 per cent would be used to offset base adjustments.

Seventy-five per cent of money left-over from funding new initiatives would go into a growth stabilization reserve to be used to mitigate tax spikes in years where the tax rate increase is in excess of 3.5 per cent.

MacKay was concerned the new policy puts budget decisions on cruise control and limits councillor influence over the tax rate.

“I think democracy works and council should have a say in the budget,” MacKay said. “I have never supported this from the outset.”

He disagreed with putting excess money into the stabilization fund, arguing it should be used to lower the tax rate.

“Isn’t now the time that the public deserves to have some payback?” he asked.

Hughes suggested an amendment which swapped the percentages, so 25 per cent would be used to fund new business cases and 75 per cent would be to offset base adjustments, and 25 per cent of anything left over from funding business cases go into the reserve.

“This was a ‘Hail Mary’ because I’m so opposed to the current motion I can’t even begin to describe it,” Hughes said.

Hughes motion was defeated by a vote of 5-2, with hers and MacKay’s the only votes in favour.

She pointed out almost no other municipalities seem to be using a similar policy and argued against pursuing it.

Coun. Cathy Heron responded by reading an article from York, Ontario on the usefulness of a stabilization fund.

“This reserve will help with those bad years,” she said.

Coun. Tim Osborne noted that he never ceases to be amazed at the different ways people can interpret the same policy.

He said the way he reads the policy is that 75 per cent of new assessment growth revenue is available for business cases. Approving business cases is the purview of council.

“We still have a major role to play,” Osborne said.

Osborne noted that perhaps some governance issues should be examined, questioning whether or not the standing committee on finance even needs to exist anymore given that this policy had already been approved and recommended to council by that committee, which is made up of council.

“Debating the same issue in two different forums is probably not the best use of council’s time,” he said.

Coun. Wes Brodhead noted “every dime that’s spent is approved by council” in the budget and that the policy is giving administration guidelines.

Whatever you want to call the reserve, Brodhead was in favour of it.

“Whatever it is, it’s putting away money that you have today for a time in the future when it softens the blow,” he said.

Council’s policy on budget and taxation guiding principles and the general principles for the new growth stabilization reserve were approved in a vote of 5-2. Hughes and MacKay were opposed to the motion.


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