Council and the senior managers comprising the Core Leadership Team have recently completed the 2011 Financial Plan. While there were significant challenges going into this year's budget process, there were also many positive factors.
On the positive side, the District of Squamish is already realizing the benefits of the Service Squamish Initiative. This complete realignment of our organizational business practices has brought very substantial cost savings. In addition, and in my opinion more importantly, it has resulted in services and projects being delivered at a faster rate and higher quality.
We have also continued to realize positive tax base growth in our community despite the post-Olympic and global economic transitions. There were, however, no shortage of challenges. The current labour contract with our principal union mandated a four per cent increase in wages. As labour costs account for approximately half of our operating budget, this alone impacts municipal taxes by more than two per cent. In addition, the core service and infrastructure reviews ongoing under the Service Squamish Initiative have identified many areas that require attention. For example, we are now acutely aware of, and have begun quantifying and addressing, necessary upgrades to our flood protection, solid waste disposal and water infrastructure.
With this background, council has wrestled with many difficult decisions. In our capital budget we were able to fund important projects such as $900,000 to address a dike seepage issue and $1 million for road reconstruction. In total, our capital budget authorizes expenditures of $6 million funded by borrowings of up to $4.4 million.
On the operating budget side, our staff initially presented a core status quo budget that could have seen taxes decrease by more than two per cent. I was extremely pleased with this work given our inflationary challenges. Staff also identified potential new services and priority-ranked them on a high/medium/low basis. Council chose to fund many of these new services including dike maintenance, strategic financial planning and updates of our Subdivision Control and Development Cost Charge bylaws.
At the end of the process, council approved a 2011 operating budget of approximately $34 million. Of this, almost $18 million is funded by municipal property taxes. The net result is that the average effective property tax increase for 2011 will be 2.54 per cent. Council also made decisions determining the proportion of the municipal taxes collected from each tax class. This is done by setting tax, or "mill," rates. The only change made to these ratios from last year was a significant decrease in the tax rate for the Light Industrial class. This shift resulted in a tax decrease to the average light industrial user of $819 with a corresponding increase to the average residential user of $8 per year. The District of Squamish now has tax rates for the Residential, Business and Light Industrial property classes that are at or below the provincial averages. Overall, council was pleased to unanimously adopt the 2011 Financial Plan which we believe supports critical services and reflects our community's priorities.
