The Five Horsemen of the Property Tax Apocalypse

This post is based on a cheerful little powerpoint presentation I put together for the Elphinstone Community Association. Those of you with some biblical education will know that there were only four horsemen. Well, when it comes to taxes, four are not enough.

1999 vs 2019 Snapshot – What Changed?

SCRD Population
1999 – 25,000             2019 – 30,000
Increase = 20%

SCRD Organization
1999 – 88 FTE staff      2019 – 198 FT staff
Increase = 125%

Why?

 

First Horseman – Rising Costs

  • Inflation affects everything
  • Construction costs have risen faster than inflation (5% per year), and we are currently in a building boom, which causes further increases
  • Wage pressures – Boomer retirements have left a shortage of senior management and technical staff, driving competition for hiring. Skyrocketing housing costs have also created pressure.
  • Demand driven costs – e.g. Every government in North America is faced with aging infrastructure and there are a limited number of civil engineering firms. Their fees have risen steeply.
  • Special costs – e.g. In the wake of the Fernie tragedy, communities across BC had to replace ice arena refrigeration equipment. That sudden demand escalated costs dramatically.
  • Small market – In rural areas there are a limited number of contractors, so it can be difficult to get competitive bids, or to attract any bids for projects that are small compared to what’s available elsewhere.

Second Horseman – Uploading and Downloading

  • Water improvement districts run by volunteers were once common, but with increased costs and regulations, many have been handed over to government. The SCRD operates 9 water systems, including very small ones like Granthams and Eastbourne
  • Local sewage systems are a similar story. The SCRD operates 15, including two in Area E.
  • Over the years, senior government funding for many social programs has been reduced or eliminated, so citizens have asked the SCRD to pick up the slack. Examples: Reading Rooms (Roberts Creek and Pender Harbour), Police Based Victim Services, Community Schools, and Youth Outreach Workers
  • Docks and Ports – The federal government offloaded many government docks in 2000. Because they are so important, especially to island residents, the SCRD now operates nine.

Third Horseman – Regulation

Regulations and insurance standards are far more stringent than they were even 20 years ago. A few examples:

  • The province has required all local governments to improve drinking water standards but has not provided us with funding to meet those new requirements. Our Chapman water treatment plant, which opened in 2004, cost $7 million, plus we pay the annual costs to operate it.
  • Many old wells need upgrades to meet new standards. We currently have five wells: Chaster, Soames, Granthams, Langdale, and Eastbourne.
  • Environmental requirements for septic have increased. Seven of our 15 sewage systems need replacement in next few years, and in many cases the new facilities will be more elaborate and expensive than the old system.
  • We must meet much more stringent environmental standards at our garbage dump.
  • Recycling rules just keep changing and getting more complicated. Never cheaper.
  • Equipment and training requirements for our volunteer Fire Departments have risen dramatically. For instance, fire trucks must be replaced after 20 years or they can’t be insured.

Fourth Horseman – Taking on More Services

In response to community demand, the SCRD has taken on many new services in the last 20 years, including:

  • Sechelt Pool and Gibsons Recreation Centre
  • Management of other facilities, e.g. Sechelt Arena, Gibsons Pool, and Community Halls
  • Dakota Ridge Ski Area
  • Expanded Transit Service

Fifth Horseman – Deferred Infrastructure Costs

Until 2012, local governments in BC were not even required to have a register of assets. Infrastructure was built without any consideration for long term repair and replacement costs. The general philosophy was to keep local taxes low, so money was not put aside to fund future capital replacement.

No or insufficient funds were set aside for:

  • Water main replacement and water system upgrades (e.g. our water treatment plant and dams)
  • Landfill closure costs
  • Building repairs/replacement, e.g. fire stations
  • Public works yard expansion

Basically, for many decades Canadians have been under taxed. Now our roads, hospitals, waterworks, and sewers, many of them built in the 1960’s and 70’s, need replacement. And a new generation is facing steep tax increases at the same time that education and housing costs have soared.

And the Wild Card – Climate Change 

Finally, local governments are faced with unprecedented costs for:

  • Adapting vulnerable infrastructure, e.g. at sea level
  • Emergency planning, e.g wildfire
  • Escalating insurance premiums
  • Mitigating our CO2 emissions
  • Responding to rapidly changing conditions, e.g. flooding from stormwater

We are facing a lot of competing priorities and hard choices. How much can taxpayers really afford? It’s an ongoing challenge and a tough conversation for our community.

Posted by Donna