The provision of property tax relief will impact the City's cash flow position. The City has positive cash reserves and therefore will not at this time need to make use of the existing line of credit in the short-term to preserve its cash flow requirements. The degree to which a delay in the collection of property tax revenue over the next three month impacts other revenue sources such as interest income cannot be easily estimated at this time. A full analysis is being developed which will incorporate both revenue and expenditure reductions and will be reported on as part of a separate report to City Council at a later date.
The decision to delay or defer penalties and interest until June 30, 2020 will result in an estimated loss of revenue amounting to $1.1 to $1.2 million. A significant part of the current revenue realized from penalties and interest is on property tax accounts which have fallen into arrears in previous years and is not reflective of additional penalties and interest that may have been charged if property tax relief measures were not enacted.
It is noted as well that the City will also face reduced interest earning resulting from the drop in interest rates announced by the Federal Government and the lower cash flows for investing purposes resulting from the deferral. Certainly, in addition to the foregoing, there will be positive and negative impacts on many budgeted line item due to the impacts of the pandemic. More detailed analysis will be forthcoming in subsequent reports to City Council.
Consultations:
Municipal Tax Equity Consultants (MTE)
Conclusion:
The decision to provide interim tax relief measures for taxpayers can be achieved by endorsing the recommendation of Administration. Longer-term solutions provided through tax relief, deferral, rebate and grant programs may be considered at a later date once more information is available and economic outcomes are better known.
Planning Act Matters:
Approvals:
| Name | Title |
|---|---|
| Joe Mancina | CFO & City Treasurer |
| Onorio Colucci | CAO |
Notifications:
| Name | Address | |
|---|---|---|
| |