(Editor's note: This story has been updated to reflect more accurate percentages and more accurate data from city hall).
Taxpayers owed nearly $580,000 more in total tax arrears by the end of last year compared to the same time in 2022, although more people have joined a repayment plan.
City administration presented the fourth-quarter financial report during the Feb. 26 regular city council meeting. Data about tax arrears and outstanding debt were contained within the document.
Council voted unanimously to receive and file the report.
Property tax arrears
As of Dec. 31, 2023, taxpayers owed $1,915,622 in total arrears, which included $1,586,928 in property tax liens and $328,694 in payment plans, the report said.
Conversely, as of Dec. 31, 2022, those numbers were $1,341,842, $1,211,371 and $130,471, respectively.
Therefore, the total outstanding amount of tax arrears increased by $573,780 — or 42.7 per cent — from Q4 2022 to Q4 2023. This comprised a year-over-year increase in liens of $375,557 and a year-over-year increase in payment plans of $198,223.
Meanwhile, by Dec. 31, 2021, taxpayers owed $1,330,481 in total arrears. This included $1,160,875 in property tax liens and $169,606 in arrears payment plans.
Commercial entities are why tax arrears increased last year, as they are having difficulties meeting their tax obligations, finance director Brian Acker said. While residential tax arrears are included, commercial businesses comprise the “bulk” of the increase.
Said Coun. Crystal Froese, “That (increase) is very concerning. And that’s fairly out of the ordinary. I don’t recall, in previous years, us having high commercial.”
“Commercial will always make up the largest portion of the fund. What we saw is the number of additional commercial properties come on in 2023 (so) that has pushed that up,” Acker said, adding owners can join the city’s repayment programs.
Said Mayor Clive Tolley, "It’s disturbing to hear that our tax arrears for commercial are growing."
City manager Maryse Carmichael later said commercial entities likely comprise 80 to 85 per cent of the tax arrears. Further, city hall would review why arrears rose 30 per cent and whether it was restaurants or other commercial areas.
“But … with inflation going up in the last few years, it is certainly an issue for a lot of business owners,” she added.
City hall later clarified that commercial/industrial tax arrears have increased since 2022 and currently comprise 21 per cent of all arrears.
Property taxes receivable
Property taxes receivable consists of tax arrears and taxes owing. Tax arrears are overdue taxes, while current taxes are due but have not fallen into arrears. Taxes fall into arrears in the next year following the levy of taxes.
The total outstanding property taxes receivable as of Dec. 31, 2023, was $4,564,203, which included $2,648,581 in current taxes and $1,915,622 in arrears.
In comparison, total property taxes receivable that were outstanding by the end of Q4 2022 was $3,654,411, followed by $3,445,147 in 2021, $4,769,061 in 2020 and $2,993,362 in 2019.
Therefore, the year-over-year increase is 24.8 per cent.
Borrowing/debt
As of Dec. 31, 2023, city hall was still repaying on five projects after borrowing to finance them.
The principal outstanding amount on each project was:
- Multiplex/Events Centre long-term loan: $11,251,000
- Waterworks capital long-term loan: $21,427,000
- High-service pumphouse: $7,225,000
- Buffalo Pound Water Treatment Corporation loan term loan (Bank of Montreal): $14,436,678.36
- Buffalo Pound Water Treatment Corporation loan term loan (TD Bank): $9,735,440
These projects total $64,075,118.36, a decrease from $64,306,970.18 at the end of Q3; the debt limit is $95 million.
Meanwhile, the municipality is committed to a Buffalo Pound Water Treatment Corporation loan term loan of $14,300,000, which will start appearing on the books later this year and hike the debt to $78,375,118.36.
Year-end financial summary
City administration was unable to provide either the fourth-quarter financial report or a year-end financial summary because of continued issues with new in-house software.
However, administration anticipates having an unaudited 2023 year-end statement — which it expects to show a deficit of $500,000 to $1 million — with the first-quarter report for 2024.
“Nothing’s really changed with that … ,” said Acker. “So, we are expecting a fairly significant deficit.”
Coun. Heather Eby said she couldn’t remember when council last faced a similar deficit or had to determine where to find the money. She pointed to the accumulated surplus as a rainy-day fund solution but noted previous councils used it as a “slush fund” or to reduce the residents’ tax burdens.
“And, of course, the tax arrears are not great, either,” she added.
The next regular council meeting is Monday, March 11.
