Mike W. Bryant
Northern News Services

Yellowknife (Dec 21/05) - A large pot of money for capital projects didn't stop city council voting for a tax increase Monday night.

The 2006 budget proposes $11.9 million in capital expenditures - up from $10.1 million in 2005.

Coun. Doug Witty, right, argues against a tax increase while Couns. Alan Woytuik listens. Woytuik and Brooks were the only councillors to vote against the 2006 budget, Monday night. - Mike W. Bryant/NNSL photo BUDGET TRENDS OVER FIVE YEARS: Revenue: 2006 - $42.9 million 2005 - $38.8 million 2004 - $38.3 million 2003 - $37 million 2002 - $39.8 million Over-all expenditures: 2006 - $41.5 million 2005 - $38.3 million 2004 - $38.7 million 2003 - $34.8 million 2002 - $43.2 million Capital spending: 2006 - $11.9 million 2005 - $10.1 million 2004 - $8.9 million 2003 - $8.9 million 2002 - $16.6 million Operations and maintenance: 2006 - $12.4 million 2005 - $11.8 million 2004 - $13.2 million 2003 - $10.7 million 2002 - $10 million Salaries and benefits: 2006 - $14.9 million 2005 - $14 million 2004 - $13.4 million 2003 - $12.3 million 2002 - $11.6 million Staffing numbers: 2006 - 182.5 2005 - 179.7 2004 - 177.7 2003 - 173.6 2002 - 165.95 Outstanding debt: 2006 - $8.7 million 2005 - $11.8 million 2004 - $13.7 million 2003 - $13.9 million 2002 - $13.1 million

The budget will see residents pay an additional 2.47 per cent in property taxes next year.

It passed six to two, with Couns. Doug Witty and Bob Brooks opposed.

"I'm still pissed off," said Brooks, Tuesday morning.

"There's no damn way we should be doing any tax increase this year. Not when we're going to be doing double the amount of capital projects that we normally do."

Over all, council proposes to spend nearly $43 million next year - up from $40.2 million forecasted for 2005. Of that, $17 million will come from Yellowknife ratepayers.

Not included in the budget is the $7.24 million Northern Strategy fund announced by Premier Joe Handley last fall, or $1.3 million expected to come next year from the federal government for public transit.

The Northern Strategy cash is earmarked for capital projects, which may include a sports fieldhouse in time for the 2008 Arctic Winter Games, a park at Mildred Hall school, a new library, and upgrades to the city's water and sewer system.

Brooks and other councillors hope the federal transit money can be used to lower the tax increase when it comes time to set the mill rates for property assessments in June.

The tax increase comes at a time when property values continue to grow.

In 2004 property assessments totalled $1.437 billion, up 3.8 per cent from 2003. From 2004-2005, property assessments rose 2.3 per cent to $1.495 billion despite closure of Giant and Con Mines.

The assessment roll reflects the total value of all property in Yellowknife.

If there was any opposition to the budget other than from Brooks and Witty, it wasn't evident at Monday's council meeting. Other than media, not a single member of the public showed up to hear the vote.

Councillors in favour of the budget argued that a tax increase was needed to pay off long-term debt, plus ensure that no new tax increases will be necessary after 2007.

"It's a sad fact that some of our infrastructure doesn't age as well as some of our politicians," joked Coun. Blake Lyons, adding that he found the tax increase "very reasonable."

Coun. Wendy Bisaro called the tax increase "short-term pain for long-term gain."

City Hall expects a 1.9 per cent increase in 2006. It will mark the end of the line for a three-year rolling tax increase, which started with the 2005 budget at 1.8 per cent.

Last week, council was still wrestling with a tax increase proposal of 3.25 per cent. It was cut down to 2.47 per cent after council opted to transfer $125,000 out of territorial government formula funding. The $5.9 million formula fund is generally used for capital spending, but has fewer strings attached than other government grants.

The lower tax increase became a viable option after the city received a windfall $1.41 million capital grant from the territorial government, which was used to fill in shortfalls in the capital fund after money was taken out of formula funding to soften the tax increase.

Council also scrapped a two per cent increase to city water rates, deferring it until next year.

The idea of using capital money to eliminate tax increases was the focus of much of the debate in recent days.

Some councillors bought into administration's argument that using one-time capital grants to lower tax increases will only bring about short-term relief, and won't close the gap between revenues and expenditures for operations and maintenance in future years, which is funded mostly through property taxes and user fees.

Administration said the problem is especially true if the city uses the remaining lion's share of the capital grant windfall to build more facilities, which will drive the city's operations and maintenance expenses up even higher.

The city's urge to build caused Coun. Mark Heyck to caution that even though no new tax increases are forecasted after 2007, that may not be the case if a fieldhouse is approved. The city already spends about $1.2 million a year to maintain its two arenas.

Other councillors argued that lowering tax increases while the city is flush with federal and territorial capital funding dollars only makes sense, even if it goes against city budget policy.

Witty even wondered what council's rush was to pay down the debt.

City's debt load for next year is expected to hit $8.7 million. Council hopes to have it down to less than $1 million by 2015.

"Debt-free living is definitely a lifestyle choice for the community," said Witty.

"To acquire debt over the long-term is a reasonable choice."