The Rural Municipality of Murray Harbour is facing significant financial hurdles in the coming years. At present, village operation expenditures are expected to exceed income by $12K at the 2019/20 year-end and $21K in 2020/21. To help offset a portion of this, Council has approved a 5¢ increase to municipal property tax rates in 2020.

Forecasted overages are primarily related to two issues:

1. Repayment of Loan Principal for the Cape Bear Road Sewage Extension

The village took out a loan to cover its 20% portion ($150K) of this 2018 infrastructure project. Originally, it was expected that the Sewage Utility would pay for the associated costs. However, it was later discovered through the 2018 audit that the village had already borrowed $138K from the Utility, through various transactions, in the three preceding years. In September 2019, the Utility paid the village around $14K to fulfill its remaining commitment to the project costs and to balance the Village-Utility intercompany account. With that payment, the village became responsible for the entirety of the loan.

In December of 2019, it was very clear that the village could not afford these payments. After discussions between the Utility, village, and auditor, it was agreed that the Utility would pay for the interest costs associated with the loan; this could be done without affecting the intercompany account. This leaves the village responsible for the loan principal payments of $12K/year until 2034.

2. Repayment of Misallocated Gas Tax Funds

In 2017, approx. $30K was taken from the village’s gas tax account and put into a GIC. In 2018, when the GIC matured, that money was redeemed and placed into the village’s general operating account instead of being returned to the gas tax account. In 2019, the PEI Infrastructure Secretariat, which oversees the Gas Tax Fund program, discovered the discrepancy of $31K in the gas tax account and advised the village that the money would have to be repaid with interest. As a result, the village will be required to repay $6,500/year for the next five years.

In 2019, Council and a dedicated group of volunteers made tremendous effort to try and offset some of these expenses through various fundraising activities and by minimizing expenditures where possible. However, in the long-term, Council must look at more stable solutions.

After thorough review of the financial situation, the Finance & Infrastructure Committee recommended a 5¢ increase to municipal property tax rates for 2020. This will increase the non-commercial property rate from 49¢ to 54¢ and the commercial property rate from 52¢ to 57¢. This was approved at the March 11 meeting of Council. It will generate an estimated $9300 in new tax revenue. This will cover approximately 44% of the expected cash deficit for 2020; the remainder will be addressed through various fundraising initiatives. It’s important to note that prior to 2019, there had been no tax increases for several years.

No one likes the idea of increasing tax rates, but it is ultimately unavoidable. Even without the loan and gas tax repayments, the village must still contend with year-over-year inflation on operational costs such as insurance (a 9.7% increase in 2020), maintaining village properties, and operation of important facilities like the Community Centre.

A special meeting of Council to approve the 2020/21 budget will be held meeting on March 19 at 7 pm. All are welcome to attend. 


What Does the Municipal Tax Rate Increase Mean to You?

For homeowners within the municipal boundaries of Murray Harbour, this increase will result in moderate increases to the municipal portion of your 2020 property tax. For example, if your property has a Taxable Value Assessment of:

$75,000: Your municipal property tax will increase by $37.50 ($12.50/installment)

$100,000: Your municipal property tax will increase by $50 ($16.67/installment)

$125,000: Your municipal property tax will increase by $62.50 ($20.83/installment)

To calculate your own 2020 municipal property tax:

Taxable Value Assessment/100 x 0.54 (non-commercial properties)

Taxable Value Assessment/100 x 0.57 (commercial properties)