Interest From Reserves Warrants Moose Jaw's Low Tax Rate
Moose Jaw has the lowest taxation rate per capita of the major cities in the province and you can blame it on the City’s reserves.
In the 2017 audited financial statements presented at City Council, on Monday night, the per capita municipal tax rate was $790.60. This compared to per capita tax rates of $923.36 in Saskatoon, $960.32 in Swift Current, $1000.87 in Prince Albert and $1172.28 in Regina.
In 2017 the $115,063,816 in reserves generated $3,729,214 in interest.
“The City's investment earnings from Reserves is what keeps our level of taxation down,” the report stated.
Investment income generated per capita by the Reserves equals $110.06.
Due to the low interest climate, the Reserves earned historically low returns. Despite this, if the interest was not generated there would need to be a 13.9 percent property tax increase to make up for the loss of income the Reserves generated if the budget remained the same.
“If the City is able to generate a higher return on its investments, the benefits to the taxpayer will be substantially enhanced,” the report additionally stated.
At present, the City invests in blue chip bonds but has passed a bylaw to establish an investment committee. The Investment Committee is to review all City investments and may recommend hiring a money manager as well as investing in a more diverse manner. No decision on changing the investment strategy has been made as the committee is presently formulating.
The creation of the Investment Committee was opposed by Councillors Brian Swanson and Dawn Luhning. Coun Swanson was opposed due to his view that it was too risky while Coun Luhning additionally spoke out about hiring a money manager to handle Reserves investment.
SEE RELATED: Investment Committee Re-Debated
The Reserves have already dipped in 2018 because the Accumulated Surplus of $3,299,036 was drawn down by $1,613,791 during the 2018-2019 Budget Committee deliberations to cover the General Capital Reserve which by legislation must be balanced. It is projected in the upcoming 2019-2020 budget over $4 million will be needed to balance this fund.