Discussions have heated up in council chambers during budget discussions related to the climate action levy and the climate action reserve fund.
In mid-2022, the City of New Westminster sold the British Columbia Low Carbon Fuel Standard credits it earned during the 2013 to 2020 period to Elbow River Marketing Ltd. for $26 million – and used those funds to create a new Climate Action Reserve Fund. The fund was created to provide funding for one-time investments to accelerate projects, actions, or initiatives that support climate mitigation and adaptation by targeting energy and greenhouse gas reductions.
“At Dec. 31 of last fiscal year, there was approximately $32 million,” Jacqueline Dairon, who was serving as acting director of finance, told council at a Dec. 11 workshop. “Throughout the year, there were a couple of sales of carbon credits. There will be interest allocations at the end of year, as well as the climate levy additions to the fund.”
Dairon said the climate action reserve fund had a balance of about $32 million at the end of 2022, which will be grow in 2023 via two sales of carbon credits (about $8 million) and collection of the climate action levy (approximately $2 million). She said it’s expected there will be about $42 million in the climate action reserve fund as of Dec. 31, 2023.
At the Dec. 4 workshop, council gave three readings to the electrical utility bylaw. Part of that bylaw included having the electrical utility continue to collect a 3.5 per cent climate action levy.
Coun. Daniel Fontaine proposed an amendment to remove any the 3.5 per cent climate action levy from the electrical utility bylaw
“We know that there is a 3.5 per cent amount being charged on to ratepayers. By all accounts from staff, that is equating to roughly about a $2 million additional charge to New Westminster electrical ratepayers that other ratepayers do not have to pay,” he said. “Further, this goes counter to the principles of taxing things that are heavy fossil fuel based – taxing things that we don’t want used versus removing taxes off things that we want to encourage. … This climate action levy is a 3.5 per cent tax on effectively green energy.”
In a 4-2 vote, council defeated the amendment – three times, as Fontaine put forward the same amendment for each of the three readings of the bylaw. Fontaine’s New West Progressive colleague Coun. Paul Minhas supported the amendment, but Mayor Patrick Johnstone and councillors Ruby Campbell, Jaimie McEvoy and Nadine Nakagawa voted in opposition.
Johnstone attended the Dec. 4 meeting virtually as he was in Dubai, United Arab Emirates attending the 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change. He said the levy is the type of thing that’s needed to give local governments the power to move forward on climate action initiatives.
“It is one of the things I have heard from many jurisdictions around the world, local government jurisdictions, is the need for local governments to have tools exactly like this; there needs to be a well understood and consistent small bit of seed funding in order to do climate action at the local level,” he said. “I have been able to talk about the climate action levy and I have been able to talk about our climate action reserve fund, and how that’s funded through various different means. People are really impressed with how we’ve made that work and the value we are able to get out of that.”
When discussing his amendment, Fontaine expressed concern about the levy’s impact on local residents.
“We know people are hurting,” he said. “There are issues around inflation and costs.”
Coun. Nadine Nakagawa said she’d like to get an update back from staff on a motion previously supported by council concerning equity in electrical rates. While she is concerned about affordability for families, she doesn’t support ending collection of the levy.
“Removing a really important tool that will generate really much-needed revenue for climate work, for me isn’t the answer,” she said. “It amounts to a couple of dollars for folks.”
While that may a burden for some people, Nakagawa thinks a tiered rate structure is the real answer – not removing the climate levy.
“We know that the climate crisis will unfairly impact people who are low income as well. Having money to combat that is essential,” she said. “We have already seen that with people who have died in too hot apartment buildings. We need funds to do this work.”
Deferring any action that will help address the climate emergency isn’t an option for Coun. Ruby Campbell.
“Dealing with climate action is not something for the future,” she said. “The future is here. The future is now.”
Coun. Jaimie McEvoy said there was a time with municipalities did not do any environmental work, but the climate crisis is confronting cities in many ways. He said that will include costs to modify infrastructure and deal with damaged infrastructure.
“We are lucky that we are not one of the communities that had to evacuate due to wild fires. We are lucky that we are not one of the communities that had record-breaking floods,” he said. “But the science on climate change is really clear, and the experience of our citizens is really clear. And let’s not forget: we are on a river. We have some vulnerability here.”
If at first you don’t succeed …
The Dec. 11 council agenda included a motion from Fontaine related to “improving affordability for New West residents by temporarily eliminating the 3.5 per cent climate action levy on electrical rates.”
Delegations, including several students from the Monkey Rebels, a social justice group at Glenbrook Middle School, and four residents, urged council to keep collecting the 3.5 per cent climate action levy.
“The crisis is here, and the burning of fossil fuels is at the root of the crisis. The air is polluted, and all of us are breathing at the risk of long-term health effects,” said New West resident Betty Furey. “We have solutions. New Westminster is one of the leaders with their plan for climate action. The levy on electrical bills is a progressive plan that is working. It has already generated a substantial amount of money – money that can be used to help develop and implement the solutions to this crisis and help reverse the direction which we are heading.”
Furey said the revenue generated in a year and added to the climate action reserve fund can make a “huge difference” to actions that can be taken by the City of New Westminster. She urged council to leave the levy in place.
“I cannot understand why there is a motion before council to temporarily lift the levy for one year,” she said. “This is a step backwards, and trying to reinstate the levy a year from now will create a public outcry.”
When it came time to consider the motion later in the meeting, council did not do so because Johnstone ruled it to be out of order. He said he agreed with the city clerk that was actually a “motion to reconsider” as council had defeated several previous motions to suspend the climate action levy in recent weeks.
Climate action reserve fund
In addition to collection of the climate action levy, the use of funds being amassed in the climate action reserve fund has also been raised in budget discussions.
At a Dec. 11 budget workshop, Fontaine proposed that council limit a 2024 property tax increase to 4.8 per cent, by funding anything over that amount out of the climate action reserve fund.
That motion only came after councillors had discussed three budget scenarios presented by staff, including: Scenario 1 – a “baseline budget” (covering inflation and fixed costs such as negotiated collective agreements) that included a 5.5 per cent property tax increase; Scenario 2 – an option that includes $20.6 million in service enhancements and a 6.8 per cent tax increase; and Scenario 3, which included $23 million in service enhancements and an 8.5 per cent tax increase.
At that workshop, council members expressed support for budget Scenario 2 – as well as several items from Scenario 3 (including Fontaine’s motion that council also support the hiring of seven firefighters – which equates to about a one per cent increase to the property tax).
Until Fontaine’s motion, there had been no discussion about how the city could limit the potential tax increase to 4.8 per cent.
“I'm hoping council will approve it based on the fact that we want to keep money in the pockets of our local residents/taxpayers. As well, we want to redirect some of the funds from the climate action reserve to things beyond just simply the climate action team,” he said. “I consider our fire department as part of the climate action team, and I think they should also be able to access some of those funds to offset the increases in FTE personnel.”
In a 5-2 vote, council opposed using funds in the climate action reserve fund in that way. Only Fontaine and Minhas supported the motion.
Johnstone opposed the idea of using money in the climate action reserve fund to reduce the potential property tax increase. He said the city’s climate action reserve bylaw defines what those funds are for. He added the city is in the midst of a process of analyzing how those funds can best be invested in order to reduce greenhouse gas production and to deal with both mitigation and adaptation in the city.
“This motion would, in effect, take $3.2 million out of the climate action reserve every year to put into general operations,” he said. “That is not the intent of the climate action reserve, and I don't think it's good practice. And it will not effectively reduce greenhouse gases or address the adaptation problems we have with climate action in the city.”
Funding climate staff
As part of the city’s 2024 budget process, the city is restructuring some of the work related to climate and energy. It’s doing that by merging the electric utility with the climate action division to create a new energy and climate action department.
“The funding strategy for the climate action division is that all existing and future staff will be funded through the climate levy,” said a staff report. “Remaining funds from the levy will be transferred to the climate action reserve fund, which is used to fund projects and initiatives identified through the city’s climate action plans which are necessary to be implemented for the city to achieve the adopted greenhouse gas emissions reduction targets.”
Appearing at council’s Dec. 11 meeting, New West resident Christopher Bell said he’s completely opposed to the city’s plan to find climate action staff out from levy dollars or out of the reserve fund. He questioned how that’s even permitted under the climate action levy bylaw.
Bell said the city’s bylaw states the climate action reserve fund was established to receive funding to provide onetime capital and operating investments that will accelerate climate mitigation and adaptation projects, actions and initiatives that target energy and greenhouse gases.
“Now, you're proposing a plan of action where the climate action in the city, all your three staffers, will now be going under the utilities budget and be paid by under the climate levy?” he said. “I just don't see how this can be explained. I'm asserting that your reserve fund does not allow that to occur.”
Bell said city officials have repeatedly stated the climate action levy would help finance carbon-reduction projects and initiatives that align with the city's environmental strategies and goals. He said they had never talked about using it to "build bureaucracy" at city hall.
