A simple change in bookkeeping could lead to higher taxes across Canada.
If national accounting standards change, city dwellers across the country could be left footing the bill with property tax hikes or fewer municipally-funded services.
“It certainly has the potential for some increased costs, but what the magnitude of those costs is, is anybody’s guess,” said city finance manager Ray Goruick.
The Public Sector Accounting Board, a national body that sets accounting standards, may change the way municipalities count their assets when budget time comes around, said Goruick.
“They are asking us to record or increase our expenditures that we never had before,” he said.
The new standard mirrors private sector accounting.
It would calculate the “useful life” of an asset, like a car, he added.
So, if a business buys a $20,000 vehicle it counts it as an increase in assets, not as an expense.
If the vehicle lasts five years, then its value to the business goes down by $4,000 per year, said Goruick.
This is called depreciation.
So each year, the government’s assets would depreciate, hiking up its expenditures.
“We’ve never done that as a municipality before,” said Goruick.
And if the new rule is implemented, the city will need to account for these costs.
“Because of the need to balance our budget, with revenues and expenditures balancing, that means that we have to come up with some way, either in the form of taxes, or reduced service levels, or increased fees, or some way, to compensate for this ‘increase’ in expense,” he said.
Many Canadian cities are struggling to keep their cash flow high enough to replace existing assets, said Goruick.
The federal government may also have a stake in changing municipal bookkeeping, said director of city services Robert Fendrick.
By defining what assets Canadian cities have the federal government will gain a clearer picture of the infrastructure deficit — the difference between good and decaying infrastructure, said Fendrick in an interview Wednesday.
“Probably they’re trying to define what the infrastructure is in Canada and then trying to address ‘How bad is the situation,’” he said.
The trouble for Whitehorse is that many of its underground assets, like water lines, sewers and roads, were built by the territorial government, then transferred to the city for maintenance, said Goruick.
“While they are our assets, we have absolutely no idea what the historical cost is.
“We need to determine what the historical cost is before we can determine a life expectancy, and therefore a depreciation amount.”
Like a car, the value of a road decreases over time.
“We have a good handle on our buildings,” he added.
“We also have a very good handle on our vehicles and equipment values.”
The earliest date the board would implement the change is 2009.
But nothing has been finalized yet.
“This is not the sky-is-falling by any stretch of the imagination,” said Fendrick
“Accounting generally works more or less the same speed as glaciers. These things take time to deliver.”
n LABOUR
Fallen workers mourned
Over the past 15 years, 39 Yukoners have died on the job.
Another 18,011 have been hurt and 555 have been injured for life, according to the Yukon Workers’ Compensation Health and Safety Board.
The board is hosting a ceremony in their honour on Friday, the nation-wide Day of Mourning.
Yukon workplaces are “among the most dangerous in the country,” according a release from the board.
“The equivalent of more than our entire workforce has been injured on the job since the Day of Mourning Act was passed 15 years ago.”
While the message is one of commemoration, the day is also a call to action.
“We need to do more than remember those who suffered,” the release states.
“We need to commit to keeping ourselves and others safe at work.”
The Yukon doesn’t have a memorial for workers.
But the board teamed up with the Yukon Federation of Labour to commission a temporary statue, which will feature five pillars rising out of a base of water.
Attendees are encouraged to light a candle and set it afloat on the water.
The board has begun fundraising to erect a permanent memorial.
The ceremony will begin at 12:30 p.m. on Friday in the foyer of the Yukon government building on Second Ave. (CO)