EDITORIAL: Inflation will likely affect municipal taxes and utility rates

Over the past year, Canadians have been feeling the pressures of inflation and rising prices, with no end in sight.

In October, the annual rate of inflation was at 6.9 per cent. Earlier, in June, it had reached 8.1 per cent. These figures show prices are rising faster than incomes. This is affecting finances for Canadian families, especially those struggling on limited incomes.

While governments at the federal and provincial levels have introduced measures to curb inflation or provide relief to those affected, prices continue to rise.

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In the new year, inflation will show itself in another way, as municipal governments calculate their budgets for 2023. Expect to see tax and utility rate increases in most if not all communities.

When prices of fuel, supplies or services increase, municipalities that purchase these items are affected. Since municipalities may not run deficit budgets, adjustments are needed to account for the increase in costs.

Coping with rising costs normally requires increases in tax and utility rates. This is the only way to maintain an existing level of service during a time of inflation.

It may be possible for a council to reduce the impact of inflation by cutting back on the amount of money it would normally set aside for future reserves. However, reserve funding will be needed in order to replace aging infrastructure or deal with capital works projects in a community. Reducing reserves may postpone or delay the effects of inflation, but this course of action is not a long-term solution to the impact of rising costs.

Some may suggest trimming municipal government waste. However, municipal budgets in British Columbia are already under scrutiny. It is difficult if not impossible to find substantial ways to cut costs while maintaining services.

This means higher tax rates and higher utility rates are to be expected in 2023.

While individuals and families are already being hit hard by inflation, tax relief at the municipal level is not likely.

– Black Press Media

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