Report projects possible 10 per cent tax increase

News — 10 January 2012

By Ally Dunham

Losses of revenue from the large industrial class tax base and DMTS (Dryden Municipal Telephone Service) have the city of Dryden projecting a tax increase of up to 10 per cent in 2012.

Council will vote upon an initial tax levy increase of five per cent, but will most likely see an increase of an additional five per cent before June 2012 when tax rates become final.

“We’re looking at a 10 per cent increase, coming from two directions,” said Joe van Koeverden, Dryden city manager. “Assuming that the large industrial assessment rate gets adjusted according to the appeal from Domtar. Five per cent is a normal increase that we require to maintain our service levels throughout the city, and three per cent of that is inflation. That should allow us to maintain service levels that we have in the city at this time in all areas. Any less tax increase would mean we would have to start cutting some form of service.”

According to van Koeverden’s budget report submitted at the Jan. 9 Committee of the Whole meeting, the city of Dryden faces a $500,000 decrease in tax revenue from the large industrial class, shifting the tax burden to residential and commercial rate payers.

Van Koeverden’s report also indicated that the city’s telephone service was experiencing difficulties.

“The Retain and Grow Strategy for DMTS and Dryden Mobility (DM) that commenced in 2008 has not produced the financial results expected,” reads the report. “During the last few years, the city has continued to draw a dividend from DMTS while revenues did not keep pace with the cost of capital investment and escalating operating costs on the mobility side resulting in an overall negative financial performance of the telephone department.

A reduced dividend has been planned for 2012 but future dividends will be conditional on more positive operating results. Impact of the reduced dividend will be a loss of $250,000 in revenue for 2012.”

“DMTS and Dryden Mobility is in a very highly competitive marketplace and they also require a fair amount of capital to keep them up to speed with the competition so we’re looking at every opportunity properly in DMTS and DM,” said van Koeverden. “It is a situation that needs close monitoring and watching. I think within the next two to three months, you can expect some real clarification of where DMTS is and where we’re going to go with it. We need some more time to work it through and negotiate various agreements and operating opportunities.”

The city manager says the budget is fairly consistent with last year’s budget, and will compensate for last year’s deficit of $400,000.

A draft for the 2012 budget is expected to be put before council at the Jan. 16 regular council meeting.

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