Faced with decision to raise taxes or cut services, Prince George council chooses neither

Councillors in Prince George, B.C., say they know they will eventually have to either raise municipal taxes or cut more services in order to balance the city's budget. 

But for now they've opted to do neither, instead dipping into one-time COVID-19 relief funds to cover a budget increase of more than $2 milllion.

Coun. Cori Ramsay was one of just three councillors to vote against the move, warning the decision would "come back to haunt us." Even Coun. Kyle Sampson admitted he was simply "kicking the can further down the road" when he made the motion to spend the grant money.

"This is going to catch up to us," he said. "We're going to see tough budget conversations in either service cuts or big tax increases in future years."

The city has already made deep cuts in connection with the COVID-19 pandemic, having eliminated several managers and the equivalent of 40 full-time staff from the payroll. Council has also indefinitely closed several prominent facilities, including the downtown Civic and Conference Centre and the Four Seasons Leisure Pool.

Despite these reductions, increased costs associated with snow removal, road maintenance and inflation meant council had agreed to a $2.2-million budget increase for the year ahead.

While most of that increase could have been covered by a two per cent tax increase, council voted instead to dip into a $6.1 million COVID-19 "safe restart" grant it received from the provincial and federal governments.

"If we're able to provide a bit of a break by using these safe restart funds, it's imperative we consider that," Sampson said in his motion for no levy increase. "There's a lot of people in our community who need a break."

The majority of councillors agreed, saying the pandemic had created an extraordinary situation.

"It's a no-brainer to me," Coun. Terri McConnachie said. "We're arguably at the halfway mark of a global pandemic, and we need a break."

Coun. Brian Skakun said council owed taxpayers a zero per cent increase, particularly because of recent cost overruns at city hall.

"Anything more than zero, in these trying times, is going to be too much," he said.

However, three councillors — Garth Frizzell, Susan Scott and Cori Ramsay — worried about the implications of using a one-time grant to cover rising operating costs.

"If we kick the tax increase further down the road, it's not going anywhere, it's just accumulating over time," said Frizzell. 

Ramsay warned not raising taxes now could mean a four to six per cent increase in 2022 or 2023, when the COVID-19 grant runs out, unless further reductions were made. She also noted that as restrictions lifted, there would be pressure to reopen closed facilities, further straining city funds.

"I fear if we don't at least cover inflation, we're going to be playing catch-up for years to come," she said. 

Ramsay put two proposals on the table to help cover those costs: a one per cent tax increase and the permanent closure of the Four Seasons pool, which is already set to be replaced in 2022. Given the city's financial situation, an early mothballing may be warranted, Ramsay said, especially considering the pool costs more than $400,000 annually to maintain. 

"I went through this budget line by line," she said. "That's the only [savings] I could find."

The councillors who voted against Ramsay's motion said they agree with her larger point, but believe a one-year tax freeze will buy time to prepare for future budgets.

"We need to sharpen our pencils," Sampson said.

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