Newsletter March 15, 2023: A projected 45% tax increase in the next five years
An indication of a municipality living beyond its means is if its income doesn’t cover its expenses. It is obvious that this is the District of Oak Bay’s 2023 -2027 present and future financial situation.
An indication of a municipality living beyond its means is if its income doesn’t cover its expenses. It is obvious that this is the District of Oak Bay’s 2023 -2027 present and future financial situation.
There appears to be little Council understanding that this is within a few percentage points of a 45 %, five-year property tax increase. This is on top of the last decade’s year-after-year very high tax (mainly 6%) increases. And that each of the 2023 -2027 years projected high tax increases (see above chart) will multiply Oak Bay’s annual budget at an accelerated rate. In other words, exponentially: defined as, “an extremely rapid increase (as in size or extent).”
The question is what are the millions of new tax dollars going to be used for? For instance, the District’s Administration operating expenses increased from $5,475,310 in 2019 to a projected $8,439,200 in 2023, a 54.1% increase. It is noticeable that the 2023-2027 Financial Plan presents the Administration Department, as 4 separate departments, all with substantial 2023 cost increases (see Appendix #1), They are listed with the other District Departments that have staff that provide direct core service. This makes it appear that Oak Bay’s Administration Services also provide direct core services.
This is deceptive reporting because although the Districts Administration Services, which rival the other department’s expenditures, don’t provide core services. This is an important distinction to make as core services is the main purpose that assessed property taxes are collected to provide: water and sewer improvements, law enforcement, fire protection, education, road and highway construction, libraries, and other services that benefit the community.
The District’s core service department’s expenditures typically include the materials they use to provide core services. The District’s senior staff have consistently used maintaining services levels as the rationale to substantially expand Oak Bay’s administration in the past eight years
The March 9, 2023 Financial Plan Council meeting staff presentation provided a comparative tax Increase with other municipalities. It stated that these tax increases were not significantly relevant since every municipality has its own cost drivers, different tax bases, different service levels, and life of infrastructure. While this is true for 5 of the eight listed municipalities that that are much larger than Oak Bay, however it is a relevant comparison for the other three listed smaller municipalities which have much lower 2023 property tax increases than Oak Bay.
As pointed out in Oak Bay Watch’s March 8, 2023 Newsletter the smaller CRD municipalities faced the same effects of the Covid Epidemic, have and are struggling with inflation, and their salary increases were determined by the same union. They still managed to hold their 2023 tax increases in check with each only increasing their property taxes by approximately 5%. Even 4 of the other referenced larger municipalities only averaged a 2023 tax increase of 6%. The exception was Vancouver, which still managed a single-digit tax increase, despite massive infrastructure project costs, due to all of its decades of development.
The Provincial Government, that has downloaded so many services to municipalities, seemed to have ignored they have not provided the necessary support funding. Also, that municipalities have to pass these costs, as well as their own increased expenditures, no matter how extravagant, onto their property taxpayers. However, taxpayers have no such luxury because they are at the bottom of the “tax and inflation chain”.
Oak Bay Watch Perspective (Much more Financial Information)
There seems to be no understanding by Council and Staff that there is only
one pot of money from which to draw funds to operate the municipality. If funds are diverted for purposes that prevent the effective delivery of the District’s core services, these services cannot be adequately maintained.
For example, in 2015 the fees collected by the Building and Planning Department for new development were used to fund the impact that the new development had on the infrastructure. In 2015 the District’s Building and Planning (B&P) Department’s budget was just over $100,000. However, in 2022 the B&P budget was $1,311,400. And in 2023 this is projected to increase 23.3% to $1,617,100.
Now that B&P Department’s staff complement and costs have increased by well over a million dollars. and are projected to increase even further, those development fees are now diverted to offset the costs of maintaining the high (12 person) planning staff level. As Oak Bay is one of the few municipalities that does not charge Development Cost Charges resident’s property taxes and gas tax funding, are now diverted to pay for the new development impacts.
At the February 6, 2023 Council meeting, residents alerted Council that a number of playgrounds and parks were in very bad condition, and that the restoration and infrastructure of Cattle Point* had to be addressed. The Carnarvon Park Master Plan, regardless of residents calls for action, continues year after year to be “kicked down the road”. Although this year the Park’s new building’s plan is to be designed. The poor state of the Marina park and required parking areas was pointed out to the last Council however, to date improvements have not been prioritized.
Note: *See Council February 6, 2023 Meeting agenda item #5 Correspondence: Cattle Point document and letters.
Council discussion at the March 9, 2023, Special Committee of the Whole meeting indicated that the budgeted $270,000 for new admiration staff may be a 2023 budget item that could be delayed. If this possibility were realized perhaps to lighten some of the administration staff’s workload, we have some suggestions: staff could stop attending Urban Development Institute Lobbying luncheon meetings and seminars; limit attendance at Advisory Committee and Commission meetings to one staff member (as many as four have attended on occasion) and, perhaps have the one staff member attend on an as-needed basis; instead of hiring more and more consultants, as an alternative, consider a liaison with other municipalities to learn how they have already addressed many of the issues that consultants have been contracted to address.
This would eliminate the need for staff to conduct an expensive, time-consuming, RFP (Request for Proposal) process; oversee the project; bring the consultant up to speed about the Community and hold countless information and progress meetings. Not to mention saving the hundreds of thousands of dollars in Consultant contracts.
The bottom line for the District, however is twofold:
#1 The continuing growth of the Administration Services and the associated costs, combined with the economic climate, the affordability crisis and the rest of the District’s accelerated cost increases, is not sustainable. This newsletter’s 2023-2027 first-page Financial Plan chart’s 45% projected property tax, increase clearly indicates this,
#2. The real danger is Council is not understanding a basic planning concept: that new development must pay for itself.
This means the rest of Oak Bay’s homeowners will bear the costs of all the impacts.
----------------------------------
“Nothing is inevitable if you are paying attention” Oak Bay Watch
Oak Bay Watch is a volunteer community association and its members have a variety of professional backgrounds in both the public and private sector.
*******Please help us continue to provide you with information about Community concerns and Council decisions and actions. Oak Bay Watch members also help community groups with their specific development concerns. Donate to Oak Bay Watch - even $5 or $10 dollars provides expenses for door- to- door handouts and helps us maintain our website. Oak Bay Watch is committed to ensuring the Community gets the full range of information on budget, governance and all key development issues – a well-informed opinion cannot be made without this.
(Please use Secure Donate Link at top of oakbaywatch.com Home Page)
Keep informed and sign up for our newsletter – bottom of Newsletter Menu Item.
Appendix #1
Note #1: As predicted by Oak Bay Watch (see March 8, 2023 newsletter) at Council on March 16, 2023 Council slightly reduced the Property tax increase. Much more Council meeting and Financial Plan Information in Oak Bay Watch’s next newsletter.
Note #2: The Corporate Administration includes: The Chief Administrative Officer, Executive Assistant, Director of Corporate Services, Deputy Director of Corporate Services. Director of Strategic Initiatives, and a Communications Specialist.
Administration Operating Expenses
The following Departments, Police, Fire, Parks & Rec & Public Works. department have thier own Administrations and therefore are not included.
2019 Corporate Administration - $2,181,005 (See Appendix #1)
Building and Planning - $986,214
Finances & IT - $1,225,919
Engineering Services - $1.082,172
Total: $5,475,310
2023 Corporate Administration - $3,350,800 (See Appendix #1)
Building and Planning - $1,617,100
Finances & IT - $1,977,000
Engineering Services - $1.404,300
Total: $8,349,200 - $2,964,890 projected increase = 54.1%
__________________________________________________________________________________________
Administration Department: Projected 2023 expenditures are:
Corporate Administration - $475,800 (16.5% increase); Building and Planning - $305,700 (23.3% increase); Tourism $150,000 (100% increase), Finance and IT $116,000 (6.4 Increase), New administration staff Office accommodation costs - $650,000 (100% increase)
Operating Expense Increases:
2016 - $20,910,175,
2021 - $36,155,88
2023 - $48,952,600
Special Initiatives: 2021 - $85,000: 2023 - $1,545,900
The question is what are the millions of new tax dollars going to be used for? For instance, the District’s Administration operating expenses increased from $5,475,310 in 2019 to a projected $8,439,200 in 2023, a 54.1% increase. It is noticeable that the 2023-2027 Financial Plan presents the Administration Department, as 4 separate departments, all with substantial 2023 cost increases (see Appendix #1), They are listed with the other District Departments that have staff that provide direct core service. This makes it appear that Oak Bay’s Administration Services also provide direct core services.
This is deceptive reporting because although the Districts Administration Services, which rival the other department’s expenditures, don’t provide core services. This is an important distinction to make as core services is the main purpose that assessed property taxes are collected to provide: water and sewer improvements, law enforcement, fire protection, education, road and highway construction, libraries, and other services that benefit the community.
The District’s core service department’s expenditures typically include the materials they use to provide core services. The District’s senior staff have consistently used maintaining services levels as the rationale to substantially expand Oak Bay’s administration in the past eight years
The March 9, 2023 Financial Plan Council meeting staff presentation provided a comparative tax Increase with other municipalities. It stated that these tax increases were not significantly relevant since every municipality has its own cost drivers, different tax bases, different service levels, and life of infrastructure. While this is true for 5 of the eight listed municipalities that that are much larger than Oak Bay, however it is a relevant comparison for the other three listed smaller municipalities which have much lower 2023 property tax increases than Oak Bay.
As pointed out in Oak Bay Watch’s March 8, 2023 Newsletter the smaller CRD municipalities faced the same effects of the Covid Epidemic, have and are struggling with inflation, and their salary increases were determined by the same union. They still managed to hold their 2023 tax increases in check with each only increasing their property taxes by approximately 5%. Even 4 of the other referenced larger municipalities only averaged a 2023 tax increase of 6%. The exception was Vancouver, which still managed a single-digit tax increase, despite massive infrastructure project costs, due to all of its decades of development.
The Provincial Government, that has downloaded so many services to municipalities, seemed to have ignored they have not provided the necessary support funding. Also, that municipalities have to pass these costs, as well as their own increased expenditures, no matter how extravagant, onto their property taxpayers. However, taxpayers have no such luxury because they are at the bottom of the “tax and inflation chain”.
Oak Bay Watch Perspective (Much more Financial Information)
There seems to be no understanding by Council and Staff that there is only
one pot of money from which to draw funds to operate the municipality. If funds are diverted for purposes that prevent the effective delivery of the District’s core services, these services cannot be adequately maintained.
For example, in 2015 the fees collected by the Building and Planning Department for new development were used to fund the impact that the new development had on the infrastructure. In 2015 the District’s Building and Planning (B&P) Department’s budget was just over $100,000. However, in 2022 the B&P budget was $1,311,400. And in 2023 this is projected to increase 23.3% to $1,617,100.
Now that B&P Department’s staff complement and costs have increased by well over a million dollars. and are projected to increase even further, those development fees are now diverted to offset the costs of maintaining the high (12 person) planning staff level. As Oak Bay is one of the few municipalities that does not charge Development Cost Charges resident’s property taxes and gas tax funding, are now diverted to pay for the new development impacts.
At the February 6, 2023 Council meeting, residents alerted Council that a number of playgrounds and parks were in very bad condition, and that the restoration and infrastructure of Cattle Point* had to be addressed. The Carnarvon Park Master Plan, regardless of residents calls for action, continues year after year to be “kicked down the road”. Although this year the Park’s new building’s plan is to be designed. The poor state of the Marina park and required parking areas was pointed out to the last Council however, to date improvements have not been prioritized.
Note: *See Council February 6, 2023 Meeting agenda item #5 Correspondence: Cattle Point document and letters.
Council discussion at the March 9, 2023, Special Committee of the Whole meeting indicated that the budgeted $270,000 for new admiration staff may be a 2023 budget item that could be delayed. If this possibility were realized perhaps to lighten some of the administration staff’s workload, we have some suggestions: staff could stop attending Urban Development Institute Lobbying luncheon meetings and seminars; limit attendance at Advisory Committee and Commission meetings to one staff member (as many as four have attended on occasion) and, perhaps have the one staff member attend on an as-needed basis; instead of hiring more and more consultants, as an alternative, consider a liaison with other municipalities to learn how they have already addressed many of the issues that consultants have been contracted to address.
This would eliminate the need for staff to conduct an expensive, time-consuming, RFP (Request for Proposal) process; oversee the project; bring the consultant up to speed about the Community and hold countless information and progress meetings. Not to mention saving the hundreds of thousands of dollars in Consultant contracts.
The bottom line for the District, however is twofold:
#1 The continuing growth of the Administration Services and the associated costs, combined with the economic climate, the affordability crisis and the rest of the District’s accelerated cost increases, is not sustainable. This newsletter’s 2023-2027 first-page Financial Plan chart’s 45% projected property tax, increase clearly indicates this,
#2. The real danger is Council is not understanding a basic planning concept: that new development must pay for itself.
- The new development fees are now being used to fund the Building and Planning Department, instead of relieving the increased stress on infrastructure.
- Council does not recognize that the new secondary accommodation, suites and planned infill, will only benefit a limited number of homeowners. It will not provide the District with any new revenue with which to support the services and amenities for this secondary accommodation’s new population,
This means the rest of Oak Bay’s homeowners will bear the costs of all the impacts.
----------------------------------
“Nothing is inevitable if you are paying attention” Oak Bay Watch
Oak Bay Watch is a volunteer community association and its members have a variety of professional backgrounds in both the public and private sector.
*******Please help us continue to provide you with information about Community concerns and Council decisions and actions. Oak Bay Watch members also help community groups with their specific development concerns. Donate to Oak Bay Watch - even $5 or $10 dollars provides expenses for door- to- door handouts and helps us maintain our website. Oak Bay Watch is committed to ensuring the Community gets the full range of information on budget, governance and all key development issues – a well-informed opinion cannot be made without this.
(Please use Secure Donate Link at top of oakbaywatch.com Home Page)
Keep informed and sign up for our newsletter – bottom of Newsletter Menu Item.
Appendix #1
Note #1: As predicted by Oak Bay Watch (see March 8, 2023 newsletter) at Council on March 16, 2023 Council slightly reduced the Property tax increase. Much more Council meeting and Financial Plan Information in Oak Bay Watch’s next newsletter.
Note #2: The Corporate Administration includes: The Chief Administrative Officer, Executive Assistant, Director of Corporate Services, Deputy Director of Corporate Services. Director of Strategic Initiatives, and a Communications Specialist.
Administration Operating Expenses
The following Departments, Police, Fire, Parks & Rec & Public Works. department have thier own Administrations and therefore are not included.
2019 Corporate Administration - $2,181,005 (See Appendix #1)
Building and Planning - $986,214
Finances & IT - $1,225,919
Engineering Services - $1.082,172
Total: $5,475,310
2023 Corporate Administration - $3,350,800 (See Appendix #1)
Building and Planning - $1,617,100
Finances & IT - $1,977,000
Engineering Services - $1.404,300
Total: $8,349,200 - $2,964,890 projected increase = 54.1%
__________________________________________________________________________________________
Administration Department: Projected 2023 expenditures are:
Corporate Administration - $475,800 (16.5% increase); Building and Planning - $305,700 (23.3% increase); Tourism $150,000 (100% increase), Finance and IT $116,000 (6.4 Increase), New administration staff Office accommodation costs - $650,000 (100% increase)
Operating Expense Increases:
2016 - $20,910,175,
2021 - $36,155,88
2023 - $48,952,600
Special Initiatives: 2021 - $85,000: 2023 - $1,545,900