Reserve Principles

Mayor and Council

Mayor Andy Adams

Councillor Colleen Evans Councillor Charlie Cornfield

Councillor Ron Kerr Councillor Kermit Dahl

Councillor Claire Moglove

City Manager’s Report

City Manager’s Report

The Approved 2022-2031 Financial Plan

As the COVID-19 pandemic continues, signs of hope for a return to normal are with us. The last two years have resulted in considerable upheaval for governments, and the City of Campbell River is no exception. As we move into 2022, economic uncertainty influences decision making, with national inflation running at a generational high.

The City has experienced considerable growth over the last decade, while budgets have largely “held the line” to ensure stable, below average tax increases. This growth in the City increases the City’s size and population, and creates additional infrastructure that must be operated and maintained. Combined with inflationary pressures, the City will for the first time increase property taxes for its base operating budget outside of Council’s established budget parameters to ensure the ongoing financial health of the City. Each year, the City’s budget is developed to anticipate, prepare for, respond and adapt to change. The approved 2022-2031 financial plan has been developed with a build back better mindset as we collectively anticipate the end of the COVID-19 pandemic.

The City of Campbell River’s award-winning 10-year Financial Stability and Resiliency Plan has resulted in many consecutive years of low tax increases. As pressures on the City’s cost of operations grow, the time has come to consider how this plan can continue to deliver excellent budgeting principles alongside community needs.

The approved 2022-2031 plan continues to focus on Council’s strategic priorities: relationships, economic health, livability, governance, the environment and growth management. The long-term plan also includes future-focused sewer, water and roads renewal to help prevent service disruption. As we navigate this evolving situation, we take pride in serving our motivated, innovative community. We’re connecting more online, helping community members stay healthy, and doing what we can to help businesses, builders and developers adapt and keep working.

Ongoing housing and development growth in Campbell River continues. At the same time, the local vacancy rate remains extremely low, and both private and non-profit developers are building rental units.

In the meantime, we continue to serve, providing safe drinking water, sewer treatment, emergency response, roads and parks maintenance and 100 other local government services our community relies on. Doing things differently, we are gradually, carefully resuming former levels of service.

DEBORAH SARGENT

City Manager

Deborah Sargent City Manager

Overview

Executive Summary

The City of Campbell River has dealt with many challenges presented by the COVID-19 pandemic. Capacity restrictions have greatly affected a number of recreation offerings, more services are being delivered cirtually, and City finances have been affected with shifting needs.

As the pandemic continues, hope remains that 2022 will bring a return to more normal times. This hope has guided the development of the 2022-2031 financial plan. Alongside this hope is a desire to build back better, and to reinvest in the many important services offered to the community. The approved 2022-2031 Financial Plan was developed using best practices, strong financial principles, and robust policies, including the award-winning Financial Stability and Resiliency Policy. The outlook for the near future shows continued high national inflation rates which greatly affects the City’s purchasing power. Consideration of these high inflation times has resulted in an additional property tax levy of 0.75% designed to help keep pace with inflationary pressures – the first time such a measure has had to be put in place under the City’s Financial Stability and Resiliency Program. This policy guides the City of Campbell River’s financial planning process and provides a framework that focuses on long-term strategic planning and prudent fiscal management. It is the cornerstone for financial decision making to ensure sound fiscal management.

The approved 2022-2031 Financial Plan focuses on building back stronger; key to this is continued investment in City operating budgets. Over the last 5 years, the City has lost several million dollars in purchasing power due to operating budgets not rising in line with the cost of doing business. A dedicated 0.75% tax levy will begin to put dollars back into operating budgets that haven’t seen increases in several years, assisting in our ability to maintain the services that our citizens have enjoyed. Municipal governments face a balancing act in maintaining core services that residents and businesses expect, while making investments for the future to ensure the City can respond to the pressures and opportunities of a growing community. Campbell River’s property tax increases keep the levy on a home of average value in the mid-range of tax increases as compared to other British Columbia communities of similar size.

The Financial Stability and Resiliency policy provides budget parameters that ensure tax increases remain between 2-3.5 per cent. The City continually faces increasing pressure to maintain current service levels and base operations, while meeting the community’s growing needs. This is compounded by the requirement to renew/ replace aging infrastructure and unforeseen changes to revenue and expenses. With high inflationary pressures forecast through 2022 and beyond, the new normal for tax increases may be higher than recent years.

Highlights of the Financial Plan

The 10-year Financial Plan provides a path of stability for citizens and businesses that plans for today and the needs of tomorrow.

The 2022-2031 Financial Plan seeks to:

• Maintain and improve operations and service levels.

• Invest in asset renewal and replacement.

• Continue to build a vibrant community with public spaces that support arts, culture and the environment.

• Meet the City’s commitments to provide safe and healthy workplaces and public spaces.

• Invest in and foster a safer downtown experience for everyone.

Dennis Brodie

Acting Director of Finance / Chief Financial Officer

For many years, the City has maintained zero increases in operating budgets outside of contracted increases. This program has been successful in ensuring the City’s base operating budget has remained in line with community expectations. As costs continue to rise, it is becoming increasingly challenging to hold the line on operating expenses while continuing to provide services at a level the community desires.

The approved 2022-2031 Financial Plan includes modest service level increases, and an overall property tax increase of 3.13 per cent in 2022. The approved increase consists of 0.81 per cent for the City’s operations (inclusive of a dedicated 0.75 per cent increase for high inflationary pressures and a decrease of 0.83 per cent due to a reallocation of downtown revitalization tax revenues), 1.66 per cent for the enhancement of services, and 0.66 per cent to invest in infrastructure. Proposed 2022 operating and capital plan budgets total $2,891,600 and $25,451,234 respectively of new projects. Strong non-market change (NMC), which provides additional property tax revenues, is estimated at $549,000 from new construction. This additional revenue, which has been consistently high in recent years, allows the City to fund new ongoing services related to community growth, and in response to community demand. For 2022, similarly with 2021, the base operating budget came in higher than the 1.5-2 per cent parameter. As a result, all of the NMC revenue has been used to offset tax increases according to the principles of the Financial Stability & Resiliency policy. This illustrates the increasing base budget pressures for inflationary items and contractual commitments that are higher than the base budget parameter maximum of 2 per cent. A 1.66 per cent tax increase helps support new ongoing services for the community. New and enhanced services include new communications and economic development resources, electronic file disclosure services for the RCMP, enhancements to the airport operating budgets, new positions in development planning and building inspections, and continued investment in parks and invasive species management programs.

Asset management work has developed a realistic 10- year capital replacement plan, which is a fundamental aspect of the principles of the Financial Stability and Resiliency policy. In 2020, the City completed a fully- grant-funded Asset Infrastructure Investment Plan, which will further inform capital budgeting, capital funding, and timely infrastructure replacement over the 10-year plan as it is integrated in 2022.

The proposed 10-year plan includes an investment of $107,958,176 for aging infrastructure over the next 10 years, funded by reserves and a 0.66% incremental tax levy each year. The City also allocates unanticipated revenue and expired debt payment commitments directly to fund infrastructure renewal and replacement. In other words, the City re-invests in infrastructure. This minimizes the need to raise property tax rates, which helps keep tax increases stable and more predictable.

After several years of depleting capital reserves to cover infrastructure replacement, the community will need to discuss whether to borrow money for future infrastructure replacement. Council’s debt policy designates the City’s ability to borrow money largely towards replacing or renewing current infrastructure. Long-term infrastructure debt continues to be low and well below the debt policy $65 million limit. The 2022 budget process has continued to advance strategic long-term financial planning with the use of business case financial decision making and capital project planning. Capital project planning will help identify project timelines, stakeholder involvement, inherent risks involved with projects and the impacts that a project may have on other City departments. There has been increased focus on budgeting for necessary planning activities, integrating asset management into long-term financial planning, as well as ensuring renewal and replacement for all asset infrastructure categories.

The approved 2022-2031 Financial Plan proceeds on the path of best practices in local government as the City continues to fine tune the strategic decision-making process with a focus on value for taxpayers. A 2019 community satisfaction survey provided evidence that Campbell River citizens appreciate the level of services offered by the City and receive good value for taxes paid. It also identified that people support paying for the maintenance of services, as long as the funding is being used in a fiscally responsible manner.

The approved 2022-2031 Financial Plan outlines and communicates to taxpayers how the City has allocated resources to achieve Council’s priorities and to deliver services at the high level expected by Campbell River residents and business. It demonstrates the City’s commitment to continuous improvement and fiscal responsibility to meet the needs of a growing and vibrant community today and in the future.

DENNIS BRODIE

Acting Director of Finance & Chief Financial Officer