Kingston city councillors said they can’t remove the sting of a property tax increase in the midst of the COVID-19 pandemic, but they did find an extra $1 million to help struggling local businesses, arts and non-profit groups this year.
Councillors approved the 2021 operating and capital budgets Thursday following three long nights of budget talks and presentations this week.
The city’s $395-million operating budget comes with a municipal property tax increase of 2.4 per cent, as recommended by staff, which includes 1.4 per cent to cover inflationary costs and a dedicated one per cent tax for infrastructure projects.
Councillors grappled with the optics of approving a tax hike at a time when many homeowners, businesses and organizations are struggling with pandemic-related lockdowns, but decided that now is not the time to push for a tax freeze for home and business owners after staff warned it will only add pressure to double the tax hike in 2022.
“A zero per cent (tax increase) this year doesn’t really solve the problem. It leads to five percent next year,” says Coun. Ryan Boehme.
The 2.4 per cent increase will add about $88 a year to the average residential tax bill.
Though, city staff pointed out the reduced education component of the local tax bill coupled with reduced provincial taxes on the commercial business class will actually lower the overall residential impact to 2.1 per cent while business taxes will be frozen at 2020 levels.
In an unprecedented move, council also agreed to dip into the city’s emergency reserve fund to provide an extra $1 million in pandemic relief assistance to struggling local businesses, non-profit organizations, recreation and arts groups.
“I doubt we are going to get too many ‘thank you’ notes for 2.4 percent. But we are still in position to lend a helping hand,” said Coun. Wayne Hill.
Mayor Bryan Paterson introduced an 11th hour amendment to the budget to siphon that money from the reserve fund, which is expected to have a year-end balance of $7.5 million.
“We can always find excuses to do nothing. This motion is about leadership to put aside dollars and send a signal to struggling businesses that we want to help.”
But the devil will be in the details of how that money gets dished out in the coming months.
Paterson’s million-dollar motion will allocate $600,000 to small businesses through an unspecified program that will be administered by Kingston Economic Development Corporation,, plus $200,000 for recreation and social services, not-for-profit organizations for the United Way to administer and another $200,000 for Kingston artists and arts not-for-profit groups to be allocated through the city’s existing arts fund.
“I won’t suggest this will be enough to save every business,” Paterson noted.
He says the motion aims to strike a balance between wanting to help businesses and community groups, while not drawing too much from the working fund reserve, a special account the city uses for one-time emergencies and other expenses.
He cautioned against raiding municipal reserves to allocate even more money at this time.
“We’re not helping the community at all if we burn through our working fund reserve and have no reserves left, and have no choice but to raise taxes to a higher level in the future.”
While councillors agreed to support arts, sports and non-profit social services groups, some are worried about whether $600,000 earmarked for small local businesses will actually help.
Coun. Simon Chapelle argued the city should not be wading into provincial and federal business relief efforts.
“What we are doing is picking winners and losers. I don’t think this is an equitable format. It’s a very limited amount of money,” Chapelle said.
He also questioned the still-unknown criteria by which the money will be doled out, and he is uneasy approving relief aid when the city has not yet defined the scope of who qualifies and who doesn’t, how much will recipients get, or even how to define a small local business.
Coun. Peter Stroud says he doesn’t support using Kingston’s economic development branch to distribute the business aid with “its track record of spending money unwisely,” while voicing concerns that the one-time funding could be spent on failing businesses that end up failing anyway.
Chief administrator Lanie Hurdle tried to ease councillor anxiety over how the money will be allocated.
“Our intent is to come back to council with proposed criteria before anything is actually allocated. We will work with KEDCO to establish criteria.”
Coun. Ryan Boehme supports drawing $1 million from reserve accounts.
“It’s really a way of showing the city is trying to help local businesses, though we may not be able to save them all. What the community is looking for is a glimmer of hope. That’s what this motion does.”
He says the emergency reserve account — often referred to as the city’s rainy day account — is the perfect method to provide one-time pandemic relief.
“It’s a rainy day. Heck, it’s a rainy year.”
The special pandemic aid for businesses was approved 11-2, while additional funding for the recreation, arts and non-profit groups was approved 13-0 on the final night of budget talks.
Bylaws for the 2021 budget, tax increase and million-dollar pandemic relief support are expected to be formally ratified by council Feb. 16.
The overall operating budget will maintain existing municipal services and programs at current levels, despite an $11-million loss in transit, parking, recreation and culture service revenues due to pandemic-related lockdowns in 2020.
Some examples of the pandemic’s projected ongoing toll on city revenues this year:
- transit revenues have been budgeted at 45 per cent of normal levels, a reduction of $4 million, while ridership levels will take about three years to return to pre-pandemic levels
- recreation and cultural revenues have been budgeted at 51 per cent of normal levels, a reduction of $5.7 million over 2020, due to the closure or scaled back operation of municipal rinks, Leon’s Centre, Grand Theatre and recreational programs
- parking revenue budgets are down by $383,000 over 2020 budgeted amounts due to reduced demand for parking permits as a result of employees working from home and limited shopping and event capacity
- airport revenues are decreasing 48 per cent, or $873,000 over 2020 budget estimates, because of travel restrictions and reduced flights.
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