Executive Decides To Use Accumulated Surpluses For Commercial Tax Appeal Losses

Moose Jaw commercial property owners have escaped funding the expected large number of commercial property appeals as Executive Committee has agreed to fund it from the shrinking Accumulated Surplus but not after discussion and some flip flopping on the issue.

“We are confident unfortunately in 2021 we will have a large number of commercial appeals,” finance director Brian Acker told the committee earlier this afternoon.

According to a report, that despite winning a number of appeals, the amount commercial property taxation appeals will tie up in revenue in 2021 is estimated to be $500,000.

To make up for the losses the Committee was presented with two options - surcharge all properties in the commercial property class five percent or take the money from the accumulated surplus.

The accumulated surplus is where unused budgeted funds for things such as - a portion of unused snow removal money - is held in a reserve and is often referred to as a rainy day fund.

At present the accumulated surplus sits at about $1,343,000 after an anticipated deficit of approximately $194,000 in 2020.

Commercial Surcharge Option

In making their recommendation to charge a five percent surcharge to all commercial properties the report from Administration said it would be possible to fund this once again from the accumulated surplus, but this is not a sustainable source of funding.

Under questioning from Councillor Crystal Froese finance director Acker said Moose Jaw has “more of a significant issue than other communities” when it comes to commercial appeals.

Acker portrayed the losses to appeals as they wind through the system as a major concern.

“$500,000 on $29 million in taxes is a huge issue,” Acker said.

Councillor Heather Eby said she supported Administration’s recommendation to place the five percent surcharge on the commercial property class because the accumulated surplus was better used for emergency situations.

“I actually agree with the recommendation and agreed with it last year,” Councillor Eby said. “This has been a hard one and it has been a hard one every year.”

“To take from the accumulated surplus is taking from the taxpayer as it was taxes at one time,” she said.

Councillor Dawn Luhning said given the pandemic year the City should use the accumulated surplus.

“Because of the last year I am not sure I want to take on another tax increase on Moose Jaw residents,” Councillor Luhning said.

Councillor Eby said she said the reduction in the accumulated surplus “leaves us in an uncomfortable situation.”

Councillor Froese however said she did not support the increase to commercial taxes because of the effects of the COVID - 19 pandemic.

“The struggle is real out there now,” she said, adding “surpluses are for rainy days and in a pandemic I don’t know when you don’t get wetter.”

In a 4 - 3 vote (with Mayor Fraser Tolmie, Councillors Doug Blanc and Eby in favour) the recommendation from Administration was defeated.

Accumulated Surplus Option

As the discussion moved towards the accumulated surplus option Councillor Kim Robinson asked if a hybrid model - using the accumulated surplus in combination with a smaller surcharge - was a viable option.

Acker said it had not but it was possible to create a model of a three percent surcharge and $200,000 from the accumulated surplus to arrive at the necessary $500,000.

Mayor Tolmie asked for councillors to put forth their opinions on the hybrid model and not sit in silence on the issue.

“This is a short term solution…the more we do this the more we are not going to be able to make this decision,” Councillor Eby said in opposing using the accumulated surplus.

Councillor Jamey Logan said this is not the year to place the surcharge on commercial properties due to the effects of the pandemic on businesses.

“(When it comes to large landlords) these taxation numbers are passed along their tenants…it trickles down to the mom and pop shops,” Councillor Logan said.

“Is it perfect moving ahead in 2022 absolutely not but is it perfect in 2021 yes it is,” he said.

Mayor Tolmie said he wanted to vote with what he saw the majority of Council favouring.

“I voted for the other one because I felt it was what everyone was going forward on,” he said.

In a 6 - 1 vote with Councillor Eby opposed the motion to withdraw $500,000 from the accumulated surplus to finance the losses from commercial property tax appeals was approved.

The vote must now be ratified at a future Council meeting.