By Sheldon Spackman

cash crunch

Council approves boost to Red Deer County’s borrowing limit

Feb 20, 2020 | 1:36 PM

The ongoing struggles of oil and gas companies in central Alberta has led Red Deer County to bolster its borrowing limit to help get through leaner times.

On Tuesday, council passed third reading of the Municipal Borrowing Bylaw which increases the County’s borrowing power on its revolving line of credit from $25 million to $30 million.

County manager Curtis Herzberg says the move is needed to offset a short-term cash shortage they’re anticipating.

“There’s a period of time during any one of our fiscal years where our expenditures and our revenues are not lining up in a way that we’ve got cash to cover all of that, so we have a line of credit, not unlike other communities,” he explains. “Generally, we look at having our taxes and our levies out in June-July. So depending on when those revenues come in, we start spending the vast majority of our money in the construction season, so they can sometimes overlap in a way that leaves us short.”

Despite usually needing around $25 million for short-term borrowing, Herzberg says a boost in that amount is now required.

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“Our receivables for certain types of taxes as a lot of people know, have gone up over the last few years, much like other rural communities in this province,” says Herzberg. “We’re dealing with a different level of taxes-owing in oil and gas ($4.9 million as of Oct. 2019). Our numbers have not quite doubled, but they’re significantly higher than they were in previous years.”

Herzberg points out however, that he doesn’t anticipate the county’s short-term borrowing limits to be at the $30 million level every year.

“It shouldn’t be seen as too alarming,” says Herzberg. “It’s reflective as we say in terms of the economy and everything else. It’s just something we feel we might need over these next few years and we’ll keep an eye on things.”

Also on Tuesday, council approved a budget amendment to allocate $2 million from next year’s budget, in order to increase the scope for Phase 1 of a Fiber Optic Build in 2020.

The funds are earmarked for the expansion of the successful 2019 Springbrook to Junction 2 and 42 prototype fiber build. Officials note that moving $2 million from a $5 million budget in 2021, results in a $4 million budget for 2020 and a $3 million budget for 2021.

It’s anticipated the budget reallocation will create the potential to open residential, commercial and agricultural markets to 1 Gbps internet access.

The build is anticipated to connect as much as 10 percent of the county’s population, and help facilitate the connection of internet-starved communities like Delburne with the potential to add another 446 customers to the county’s network.