Saturna Island Property Owners Association

P.O.Box 27, Saturna, British Columbia, V0N 2Y0

SIPOA@saturnanet.net

March 9, 2011

Of the two certainties in life, death and taxes, we are happy to be here to talk about the latter. With regard to taxes, we ask you as elected members of the Trust to take a leadership role in fiscal responsibility by adopting a principle of restraint in the current budget exercise. Specifically, we ask you to bring in a no-increase budget for 2011/2012. All Canadians and all levels of government in Canada are forced to hold the line on spending in the current economic climate. We ask you to demonstrate leadership and do the same.

Our presentation includes a general principle, a suggestion and several questions.

First, the principle: We believe that any tax increase should only in rare circumstances exceed the rate of inflation. We urge you to adopt this principle in your budget planning.

The Islands Trust budget history shows year-after-year expenditure increases that go well beyond the rate of inflation – this year's proposed increase at multiples of 6.9% is more than six times the 2010 rate of inflation in Victoria.

With reference to the Islands Trust News Release of January 24, 2011

Last year, the owner of a property assessed at $450,000 paid about $287.00 in Islands Trust taxes. If approved by Trust Council, the proposed Islands Trust budget for 2011-2012 would mean a tax increase of approximately $12.60 for a property of that value.

· If starting in the 2004/05 budget year the General Property tax component had increased at the rate of inflation, and providing allowance for the Islands Trust to absorb the increase associated with tax base growth, we estimate that the average property owner would be paying approximately $210, not $300, in support of the Islands Trust. This divergence from taxpayer affordability should not continue.

Second, our suggestion: With a view to reducing expenditures, we suggest that you remove the proposed increase in trustee remuneration from the budget. We believe it is a given that being a trustee is a public service, not a job. An extra $1,200 a year, as is proposed on Saturna, is not going to attract someone looking for work or a more diverse group of candidates. We realize that sometimes it is not fun to be a trustee, particularly when folks like us show up to challenge you. Another $1,200 does not make it more fun. The current remuneration for trustees is a stipend for the trustee's commitment to public service. To propose a raise in that stipend, however minimal, in a time of economic downturn, creates very bad optics and it saddles the next group of trustees, of which you may or may not be part, with a $200,000 cost increase on day one.

Finally, we have some questions on the way grants are incorporated in your budget. We ask for greater transparency with regards to the non-itemized contracts under $25,000. In last year's budget those contracts amounted to $882,824.40 or 42% of all money spent on outside suppliers. Our questions are:

· How many of these proposed projects originated with a grantor?

· Are bids for these various projects advertised openly and above board?

· Will the grantor benefit once these projects are implemented?

· Are most grants a one-off or is there a commitment for renewal?

· Once an additional set of regulations has been eased in with grant money, how are subsequent requirements financed?

· Are these proposed projects costed out?

· Has their effectiveness been evaluated by an independent body?

We ask these questions in the spirit of enhancing confidence in the Trust. To that end, we submit that greater clarity and transparency is required on your communication about the budget and the line items within it. To avoid any apprehension of conflicts of interest, budget details need to be clear and unambiguous.

In our opinion, the optics surrounding this year's Islands Trust budget leave much to be desired. However, we remain hopeful that you are in a position to rebuild confidence in the Trust among taxpayers in the Gulf Islands. We understand you have limited time in which to study the new budget, but we encourage and support you in reviewing it with critical eyes and sharp pencils. This would be a very good year to ratify a budget that holds the line on spending. We ask you to consider our principle, our suggestion and our questions as tools to assist you in reconstructing your current draft to achieve such a budget.

Thank you

Ron Hall and Bernie Ziegler (for: Saturna Island Property Owners Association)