The Province announced relief for BC businesses and local governments last week in BC’s COVID-19 Action Plan. This is an initial step and the Province continues to monitor the impacts. The Province continues to encourage sound financial management by local governments in the midst of COVID-19 through revenue forecasting and scenario planning, prioritization of expenditures and evaluation of discretionary spending, both operating and capital.
A summary of last week’s announcements includes:
Property Tax Measures for BC Businesses
1. Extension of interest penalty date for Classes 4, 5, 6, 7 and 8 on all municipal taxes
- There will be no penalties imposed on property tax payments for Classes 4, 5, 6,
7 and 8 made on or before September 30. Taxes will still be due on the date established by the local government, however interest is not applicable until
- For mixed rate properties including Class 4, 5, 6, 7 or 8, the penalty date for the entire portfolio is extended to October 1.
- The tax due date and interest penalty date for remaining Classes remains at the discretion of each local government. Consider the impact on cash flow that comes with deferring the due date or interest penalty date.
2. Modification to school tax rates
- In addition to a 50% decrease in school tax for Classes 4, 5 and 6 announced March 23, further reductions were announced to Classes 4,5,6 7 and 8 so overall tax will be reduced by approximately 25%. Detailed rates are included in the news release backgrounder (link below).
Property Tax Measures for Local Governments
1. Deferral of school tax payment to the Province
- Typically due 7 days after the tax due date, and monthly thereafter, all school tax payments collected by local governments and payable to the Province are deferred to the end of December 2020. Cash flow deferral can be redirected in the short term for operational needs.
- Requisition payments to TransLink and BC assessment Authority are due in full August, rather than in August and December.
- Payments to other bodies remains unchanged and are not deferred (Regional Districts, Regional Hospital Districts, MFABC, etc.).
2. Internal borrowing permitted from reserves
- To maintain access to cash, local governments can cover short term or permanent revenue shortfalls by borrowing from reserves (including capital reserves) for up to 5 years.
- Interest on the loan is at the local government’s discretion; it may be repaid on an interest-free basis.
3. Deferral of repayment of existing revenue anticipation borrowing from MFABC
- Existing facilities typically due to be repaid by December 31, 2020 are granted an extension and can be repaid by December 31, 2021.
4. Deferral of tax sales
- Municipal property tax sale provisions will be amended to allow local governments the discretion to delay the statutory date of property tax sales and remissions for one year.
- A delinquent property owner will have an additional year to carry the taxes as “delinquent”.
5. Extension of reporting deadlines
- As previously announced, the submission date for financial statements and LGDE forms is extended to later in the summer if needed.
- The SOFI and Annual Report submission deadline has also been extended from June 30 to August 31.
The Province continues to encourage local governments to manage their budgets soundly, maintain liquidity and cash flows through use of deferrals announced, and if and when needed, modify leverage by drawing on a line of credit with an existing financial institution or through revenue anticipation borrowing from MFABC.