With the onset of COVID-19, City of Powell River chief financial officer (CFO) Adam Langenmaier has provided a snapshot of the city’s finances for the month of May 2020.
At the June 24 council meeting, the first item Langenmaier outlined was property taxes. He said the city changed when due dates are, as did the province, and he has been tracking how the rate of property taxation has been collected since notices went out in early June. He compared that collection, on a weekly basis, with prior years.
Langenmaier, in a written report to council, indicated there is a total of $31,571,500 in taxes to be collected. This includes the city’s share of $24,366,300, and all other taxation authorities, at $7,205,200.
He said as of the first and second weeks in June, which is the timeline the finance department had data available to draft a report, collections are about 4.3 per cent below weekly averages of the prior four years. Since then, the department has another week of data that wasn’t in the written report and the city is trending to a lower collection rate, he added.
“We’ve gone from -4.3 per cent down to -8.1 per cent,” said Langenmaier. “What we are seeing, though, is the total number of folios being collected is pretty consistent, so what this tells me is residential properties are being collected at normal rates.
“What we are not seeing is those commercial properties being collected. They still count as one folio but make up a bigger component. I will continue to track this and provide it to council next month.”
Langenmaier said council has put forward a recommendation to put some recreation activities at Powell River Recreation Complex on hold until the city collects 85 per cent of its taxes. He said at this time, it cannot be forecast if the city will hit that figure by the typical July 2 tax deadline. He said the deadline to pay taxes without penalty is now September 30.
Another area with COVID-19 impacts is in fees and charges. Langenmaier said the planning department is actually over budget, which shows its business hasn’t slowed down.
Downward changes are in transportation, such as the airport, the harbour and transit.
“All those reductions make sense,” said Langenmaier. “We were expecting that.”
Going into parks, recreation and culture, recreation programs are down in terms of fees and charges, as is Willingdon Beach campground.
“We might see a recovery in the campground because June, July, August and September are when the campground makes its money,” said Langenmaier. “We might see some recovery in the harbours, too, because people travel more in the summer.”
With regard to expenses, wages make up the majority at two-thirds of the city’s overall expenses, according to Langenmaier.
“We are below budget; this is due to the closing of the recreation complex and a few positions that came up to be filled that we held off on until we knew a little bit more about what is going on,” he added. “I expect the wages to continue being a little bit below what the budget should be and it will really depend on what happens with the recreation complex and other services.”
In terms of the city’s cash position, it has more cash in the bank than it probably ever has, said Langenmaier, due to receipt of grant money for the liquid waste treatment plant, and money from borrowing for the plant.
“We have this cash being held and we are just waiting to get that project rolling,” said Langenmaier. “The interesting part is, at the end of May, we were working in a deficit for unrestricted cash. So, although we had $58 million in the bank, we had gone through our liquid reserves.”
Langenmaier said council could have used borrowing to keep the city out of that deficit position, which would have incurred interest costs, but the city has borrowed from its own restricted reserves, which has reduced the cost to the taxpayer, because the borrowing is not charged interest.
The money has been put back into the reserves it came from and the city is in a cash-positive position once again, the CFO said.
Langenmaier said the city is still going to hold off on deferred capital projects until after the July 2 tax deadline, to see what collections have come in.
Councillor and finance committee chair George Doubt said it was a great report and he urged residents to take an opportunity to look through it and see what the city’s finances actually are, because “it’s a good and honest description of where the city stands.”
Councillor Cindy Elliott said it is a good practice to issue such reports on at least a quarterly basis.