Mayor says small tax increase still needed as Abbbotsford posts large 2019 surplus

Mayor says small tax increase still needed as Abbbotsford posts large 2019 surplus

City posted $28 million operating surplus in 2019; mayor says finances in good shape despite virus

There is no way to predict the effect of COVID-19 on the finances of the City of Abbotsford, according to its accountants. But they can say the city had another profitable year in 2019, socking away tens of millions of dollars into various reserves.

The city ran a total surplus of $61.7 million last year, and while about one-third of that comprised non-financial assets, the city was still able to put more than $40 million into reserve funds to be used for capital projects and other initiatives. General operating revenue was about $28 million more than expenses, after amortization.

Mayor Henry Braun said the city is in good financial health and isn’t in immediate need of support from other levels of governments, as some other municipalities have requested. In fact, he said he was surprised by other mayors’ claims of fiscal calamity.

“You hear these stories from other jurisdictions that are saying they’re in financial difficulties or on the verge of bankruptcy. Local government has to balance its budget and I would have thought, at the very least, nobody would be in trouble before July the 2nd, because that’s the budget cycle – at least the property taxation part,” he said. “The tax requisition part takes you to July the 2nd. I haven’t looked at every city, but I’ve looked at some of the bigger ones to look at what their balance sheet looks like and I’m a little surprised at what… I guess some people just want a [grant]. If there’s a line-up forming for that, I want a grant too, but we don’t need one. Not yet. We might need one down the road but at this point we’re in good financial health.”

But Braun also says significantly scaling back taxes wouldn’t be prudent.

Last month, citing financial uncertainties linked to COVID-19, the city reduced its planned property-tax increase to 2.12 per cent – down from the 2.98 per cent that had been anticipated.

Braun says that to go further and keep taxes level would have a minimal effect on individual property owners. (The owner of a typical single-family house would save an average of $50.)

But he said the city continues to face increasing costs, about half of which are tied to its police and fire departments..

“If we even for one year would have a zero per cent tax increase, it’s actually a decrease because our costs are going up two per cent and it puts future councils in a difficult spot when you do that.”

He said the city needs to be prepared for unforeseen events so it can cover any unforeseen costs in the future without immediately and dramatically raising taxes.

He also noted that much of the city’s surplus revenue comes from fees paid by developers that can only be used for capital projects needed for present and future growth.

Braun has said that he’s confident many property owners will be able to pay their taxes on time this year, and pointed to the fact that many pay their taxes to their mortgage holders, who then forward that money in July to municipalities. But he’s less confident about 2021.

“We can get to the end of the year. That’s not a problem for the city. But a year from now? I’m not so sure. That depends on what happens, and my crystal ball is no better than anybody else’s.”

Braun also suggested the surpluses may look larger than they proportionally are.

“For an organization that runs a $250 million budget, that’s a relatively small amount and it can change in a hurry.”

The province has given cities the ability to borrow money from their own capital reserves and future tax income to get through the summer. Although Abbotsford figures to be in a solid financial state, council passed a bylaw Monday that will allow it to take advantage of such borrowing, if the need arises.

Council was told Monday that it will be briefed before any such borrowing actually occurs.

RELATED: Abbotsford scales back tax hike

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