Cranbrook City Hall.

Cranbrook City Hall.

Provincial supports for municipalities will be helpful for Cranbrook, says finance director

Maintaining cash flow will be key priority as local governments navigate impacts caused by COVID-19

Last week, the provincial government announced a series of initiatives and policies aimed at helping municipal governments navigate the financial challenges posed by the ongoing COVID-19 pandemic.

Some of those tools include allowing local governments to borrow interest free from capital reserves, delaying school tax remittances until the end of the year, and providing greater flexibility to carry debt.

“The COVID-19 pandemic is having significant financial impacts on all levels of government. It’s going to take hard work from both municipalities and the provincial government, but working together we will get through this,” said Selina Robinson, Minister of Municipal Affairs and Housing.

“Many local governments have already shown leadership by taking steps to help people and businesses and maintain services, while addressing their finances. With these new measures, we are giving local governments new tools as a first step to ease their financial burdens and that of businesses in their communities now, and as we look to recovery in the months to come.”

Those measures should help provide some relief to the the City of Cranbrook, according to Charlotte Osborne, the Director of Finance for the City of Cranbrook.

The biggest challenge for municipalities grappling with the financial implications caused by COVID-19 will be maintaining cash flow, Osborne said. By provincial law, municipalities are not permitted to run deficits.

Being able to borrow interest-free from capital reserves for up to five years will be helpful, Osborne said.

“We kind of had a good idea that that was coming…so that’s helpful because cash flow is going to be our biggest issue, so being able to access some of those reserves, if necessary, will be very helpful,” Osborne said.

Deferring school tax — which is included in annual property tax notices — until December will also help municipal finances, Osborne said. Cranbrook collects approximately $7 million in school tax, 75 per cent of which is typically due five days after the property tax deadline of July 2.

“Depending on what kind of tax collection percentage we see, that can be a bit strenuous to say the least,” Osborne said. “But now, the province has allowed the city to defer that to the end of December, so school taxes collected, or receivable, are not due until the end of December.”

Borrowing from capital reserves or deferring school tax allows for more flexibility for municipalities to pay for other requisitions, Osborne added.

Cranbrook collect taxes on behalf the Regional District of East Kootenay, Kootenay East Regional Hospital District, B.C. Assessment and the Municipal Finance Authority and remits those revenues back to those organizations.

“We collect taxes from those entities and remit them back to each of them, respectively, so those are all due Aug. 1, and again, depending on the amount of taxes we collect, that could cause us cash flow problems to send those, if we haven’t collected enough taxes,” Osborne said.

Additional measures also announced by the province include relief for businesses, non-profits and other organizations by reducing the school property tax rate for commercial properties to achieve an average 25 per cent reduction in the total property tax bill. The province is also postponing the date of late payment penalties for commercial property taxes in certain classes until Oct. 1.

Moving forward, city staff is currently analyzing and forecasting Cranbrook’s financial situation, in terms of the potential impacts caused by COVID-19, and will be presenting information to mayor and council for discussion next council meeting on April 27.

Based on a report to elected officials at the April 6 council meeting, regular monthly operating costs for the city are approximately $4 million, excluding the Canadian Rockies International Airport.

Annual tax revenue, including general, parcel and other requisitions, comes to just over $40 million. Noteworthy and significant annual financial obligations include other requisitions, debt payments, RCMP contract, landfill requisition, and wages and benefits.

The same report also breaks down the amount of tax revenue, either from general, parcel, or other requisitions, received by the city.

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