The Salt Spring Fire Protection District is asking the provincial government to put its Employers Health Tax on hold until there is further study of the implications for local governments.
The improvement district is facing a 7.8 per cent increase to its operations budget in 2019 mainly due to employee wages and benefits, which account for 80 per cent of the budget. One reason for the increase stems from the proposed new tax, which will see employers cover health care costs that were formally paid as Medical Services Plan premiums.
The district already covers MSP premiums for its union employees and other paid staff. Changes to the provincial regulations mean that those premiums were reduced in 2018, but the district will have to pay both the remaining premiums and the new tax until Jan. 1, 2020.
“A $25,600 increase in 2019 for MSP expense increases payroll expenses by 1.29 per cent,” fire board chair Per Svendsen explained in a letter sent to Finance Minister Carole James, Municipal Affairs Minister Selina Robinson and Labour Minister Harry Bains. While the new tax was supposed to remove the burden of MSP premiums from regular British Columbians, Svendsen observed the cost to service organizations like improvement districts will be inevitably passed on to those same people.
“To budget increases, local governments must chose between reducing services, increasing property taxes, or a mixture of both. For the district, increased expenses will most likely be funded by increased property taxes,” Svendsen wrote.
Organizations with payrolls under $500,000 will be exempt from the new tax. Some public services, including universities, community-health and social-service providers, school districts and health authorities will receive funding to offset the cost. The exemption has not been extended to improvement districts at this time.
According to the Ministry of Finance, “improvement districts that pay MSP premiums for employees will see substantial savings from the 50 per cent cut to premiums this year and next, and elimination in 2020.”
The ministry also noted that “households that benefit from improvement district services will also be saving up to $900 or $1,800 a year on MSP premiums.”
Employee wages and benefits will be increasing next year regardless of the new tax, so the fire district is looking to avoid budget hikes as much as possible. The board passed a resolution at its June 18 meeting to limit non-payroll expenses to an increase of no greater than 2.2 per cent in 2019 compared with the 2018 budget, reflecting the change in the Consumer Price Index.