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By Nicole Reis

TEMPORARY RELEIF

Meadow Lake City Council offers residents temporary penalty relief during pandemic

Apr 28, 2020 | 1:00 PM

Meadow Lake City Council is offering some temporary relief for residents during a time of employment insecurity and COVID-19 uncertainty.

At the most recent council meeting on April 27, city officials agreed to defer utility payments and reduce property taxes for a period of time which was initially brought forward at the April 14 meeting.

All councillors were in favour to temporarily eliminate penalties and gradually re-introduce them until a return to regular rates by June 2021.

According to the council agenda, the city will waive penalties for the next two billing cycles to align with the six-month grace period offered by other utility services. Penalties would then be phased back in over the next six months in order to not overwhelm property owners.

Council also proposed to implement a three-month grace period for the payment of property taxes and extending the payment deadline from July 31 to October 31. The recommendation of a three-month extension on the payment of property taxes falls in line with similar measures being taken by surrounding municipalities, with the option for further considerations in the future.

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The one per cent property tax penalty levied on August 1 has a significant impact on the timing of payments where those who can afford to do so, typically pay on the deadline and not earlier, the agenda said.

Property taxes account for 40 per cent of the city’s operating revenue, which funds fire, police and other core services that still need to operate during this time. While the city can afford to use its operating line of credit to defer the majority of its revenue intake by three months, it cannot afford to do so until August 2021.

Along with the temporary deferral of penalties on overdue accounts, City Manager Diana Burton can grant flexibility in specific situations.

City administration will also pause any disconnections for non-payment of accounts during the grace period. To address local concerns, council considered relief measures offered by other municipalities and considered the situation in Meadow Lake, where utility accounts and penalties are levied quarterly rather than monthly.

Crown corporations have implemented a six-month interest free period to assist residents and businesses through this time, followed by the option of an interest free payment plan over the following 12 months.

Impact on city budget

The 2020 operating budget includes an estimated $79,000 in property tax penalties and $30,000 in utility penalties.

If the payment pattern of prior year’s remains consistent, which is not a given in this situation, the forgone revenue for 2020 would be roughly $19,200 in utility penalties and $22,875 in property tax penalties, the city agenda said.

There could also be an impact to 2021’s budget. The impact from the March 2021 penalty reduction is expected to be approximately $2,400. According to council, these amounts can be offset by budget cuts in other areas.

The greater impact will be the reduced cash inflow, as the budgeted amount for property taxes is roughly $4.7 million and $2.2 million for utilities. However, based on the current economic situation, it is likely these cash flow impacts would exist anyway, as many property owners are faced with difficult financial decisions.

As the impacts of COVID-19 on the city’s operations become clearer, line of credit options may also be considered in addition to budget adjustments.

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nicole.reis@jpbg.ca

Twitter: @nicolereis7722