Councillors reject a bid by Deighton to eliminate tax increase
Petrolia council is bringing a $7.4 million budget with a two per cent tax increase to ratepayers Nov. 8.
That’s a half per cent less than municipal administrators presented in the draft budget Friday or about $30,000 less.
But one councillor is concerned residents are going to be in for a big shock beyond the extra $24 per $100,000 of assessment planned. Wade Deighton wanted council to take $150,000 out of the budget to eliminate a municipal tax increase saying homeowners will soon see their tax assessment soar because of the rising housing prices.
Right now, homeowners pay taxes on what their home’s market value was in 2016. The Municipal Property Assessment Corporation, which sets the tax rates, has delayed adjusting the rates for the last two years because of economic impact of COVID-19.
Real estate values have gone through the roof since then. For example, the Sarnia-Lambton Real Estate Board reported in Sept. 2016, the average price of a single family home was $232,000. By Sept. 2021, that same house was selling for $504,529 – a 54 per cent increase in value.
Petrolia CAO Rick Charlebois acknowledged that Ontarians are past due for a tax reassessment, however he’s hopeful the province will kick it down line at least another year.
If it doesn’t, Deighton says there are going to be a lot of people “freaking out” when they open their tax bill. And he says increasing Petrolia’s municipal taxes, makes the problem worse. He raised the issue with councillors as they deliberated the budget Friday morning. At the time, council was considering leaving the budget as presented by staff.
“When they approve a two and a half percent increase, that’s what they’re signing people up for – it’s a two and a half percent increase on a 30 per cent (assessment) increase…That’s a scary figure. You start talking about houses in Petrolia that are going to be paying upwards of $15,000 taxes.
“That’s why I asked the question, ‘why do you want to two and a half percent increase when you’re already going to get a 30 per cent increase in taxes from just the houses that have changed hands?”
Charlebois suggested the tax increase could be eliminated without cutting services. He told councillors the effect of cutting the $150,000 would be the town would not put as much money in its working capital reserve this year.
The working capital reserve was established in 2014. Residents faced an eight per cent tax increase as the town added the cash to the budget saying the $500,000 would be spent on current captial projects.
But a graph by staff in the draft budget book shows the town didn’t spend the full amount in that year. It left over $132,000 in the reserve that year. Since then it has grown by 30 times that amount to just under $4 million by the end of 2020.
In all, the town had $7,992,400 in reserves at the end of December 2020 according to Charlebois budget documents.
The CAO/Treasurer told council he has drafted the budget so that during the 2022 tax year at least $1.5 million more would be added to the working capital reserve. The CAO said if the tax increase was eliminated, as Deighton suggested, $1.3 million would be contributed instead.
Councillors painted a different picture of what might happen if the tax increase were eliminated. “I just don’t believe it’s realistic to start to slash services,” said Councillor Joel Field. “And, I believe that we would have to do that; I don’t see that we’re gonna we have that kind of money and pencil and paper.
“We will have growth, but if we don’t maintain what we’re doing right now and continue on path of plans that we have, I think that we’re we’re setting ourselves up for failure.”
Councillor Don Welton agreed. “I’m not in favor of changing anything because I think the staffs done a great job. We have a great town, everything’s going good. And I’ve been in budgets before where they slashed it down to nothing and all of a sudden you’ve got some expenses you have to do,” he told council. “I strongly oppose changing this budget down to zero per cent. I have great respect for our staff, they do a great job…we should stick to the budget which has been presented.”
Councillor Ross O’Hara also expressed concern about the idea. “We have to realize that wages have gone up a certain amount. And we’ve all been told over and over again, how a lot of lot of things that we plan to purchase, because of COVID have gotten more expensive,” said O’Hara. Since the pandemic began, the town has received at least $744,000 in COVID-19 relief funds from the provincial government to cover those costs.
“I guess I’m comfortable with the way the budget sits at two and a half percent,” says O’Hara.
O’Hara, Welton, Field and Loosley all voted against eliminating the municipal tax increase. Deighton and Councillor Marty Souch were in favour. Councillor Grant Purdy did not attend the budget session.
Instead, council agreed to trim a half per cent from the increase – about $30,000.
As it sits now, municipal taxes will rise about $24 for every $100,000 of assessment. With the average single family dwelling selling for around $502,000 that will mean about $120 more per year with the municipal tax bill being about $4,925. That wouldn’t include any increase from the county government which has not started its budget yet.
Charlebois projected the total tax bill could go up $33 per $100,000 with a homeowner with a house valued at $502,000 paying $7,960 in taxes a year.
Councillors also approved water and sewage increases of 2.5 per cent each.
The budget will be presented to the public at a virtual meeting Nov. 8.
Also from the budget:
Administration hopes to spend $1.65 million on capital projects in 2022. Some of those purchases drew questions.
Deighton wondered why the town would be spending $50,000 for a used mini excavator when in the past it rented the machine when needed. Director of Operations Mike Thompson told Deighton they had spent between $10,000 or $12,000 in 2021 on rentals.
“I don’t think we need to buy one we can continue to rent, because they also do repairs on it,” he said.
Mayor Brad Loosley also questioned why the town is proposing to spend $85,000 to buy a scissor lift at Victoria Hall when it is currently renting one for $2,500 to $3,000 per month. Staff says it has been difficult to rent the equipment needed particularly to get large items up to the theatre.
There is also about $914,000 set aside to improve parts of Pearl, England, Glenview, Mutual, Kentail, Third and Valentina in 2022. The town uses two grants to offset those costs, reducing the next cost to local taxpayers to $135,000.
The Public Works department has also set aside $100,0000 for sidewalk repair and replacement. There is also $40,000 in the budget which had already been approved by council for a consultant to look give a blueprint of which sidewalks should be replaced first and where new sidewalks should be built.
Another $75,000 has been set aside in the budget labeled as a donation to the Parents for Parks group. It’s proposing a $300,000 plus accessible playground in Greenwood Park. The group has raised close to $200,000 according to Loosley and asked if the town would consider a grant.
There is also $10,000 in the budget to help prepare the site for the new playground.
And if the budget is approved, the town will be getting a splashpad. The new Petrolia Kiwanis Club offered to finance the project and the town has included it in this years budget.
The 2022 budget also includes $50,000 for a new entrance sign on the south side of town on Oil Heritage Road. Administrators say they will continue to use the steel oil rig at the location but get rid of the dated sign.