(City of Red Deer livestream)

By Josh Hall (Twitter: @Vancan19)

MUCH STILL UNKNOWN

Property tax hike cut again by Red Deer city council

May 11, 2020 | 8:33 PM

Red Deerians won’t see as much of a municipal property tax increase as previously expected following Monday’s meeting of Red Deer city council.

Council, which adopted a reduced 0.96 per cent increase during Operating Budget debate in January, brought it down further to 0.50 per cent by directing administration to find $636,000 worth of reductions to expenses.

The remainder represents a contribution to future capital projects, which was already reduced from its usual 1.0 per cent at budget time.

“Unprecedented times call for unprecedented measures,” said Mayor Tara Veer, noting that about $700 million worth of capital projects have already been deferred from the City’s 10-year capital plan.

“It’s less defensible to not proceed with the capital component … we have been very methodical in closing an infrastructure deficit that we previously inherited.”

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Council had just finished voting 6-3 against a proposed amendment from Councillor Vesna Higham to scrap both components of the tax increase, thus taking it right to zero.

The mayor was referencing discussion about a period in the 1990s when council of the day approved zero per cent tax hikes, leaving the municipality struggling to catch up in the years that followed. Those actions led to double digit tax hikes over multiple years.

“This is not just to signal a political statement,” said Higham in response to comments from fellow councillors calling into question the motivation behind a zero per cent tax increase.* “This does not have to be a long term thing that will have an impact five and 10 years from now. We are facing an unprecedented situation for our public and they need us to fight not for a political statement, but in reality what may be the future in terms of them being financially stable.”

“It may make a political statement, but I believe it handcuffs future councils. I don’t think it’s financially prudent,” said Seabrooke. “I’ve been in too many cities that have done zero per cent and you always end up paying [for it] at the end. The difference between zero per cent and 0.5, 0.75 or 1.0 per cent is so negligible to the average tax-payer.”

Higham later called council’s unwillingness to seek another $600,000 in savings “unbelievable.” Councillor Tanya Handley said only partially reducing the increase didn’t go far enough, adding that council should take the opportunity to be bold.

Councillor Lawrence Lee described the crisis as a double-edged sword, saying council and the City can’t just keep cutting beyond what it already has, including more than 300 casual and full-time employees.

“That extra $50 dollars [per year] to support millions and millions of infrastructure is a small price to pay. I don’t support amendments at all,” he remarked. “We’re cutting and cutting and cutting. We’ve lost all our downtown parking revenues and we’ve lost supplementary tax revenues, so it’s not a lot we’re asking Red Deerians to do in terms of contributing to the overall health, growth and wellbeing of every citizen.”

Council also has to approve the 2020 Tax Rate Bylaw, which it addressed first and second readings of on Monday. Residential and non-residential classes will each have a decrease in their tax rate this year, while multi-family properties will see a slight increase.

CFO Dean Krejci says the reason for the abnormally low rates is because the City overcharged in 2019 when the province couldn’t provide a solid number for its education requisition, leaving the City to guess what it would be. Because it came back lower than projected, this year the City will be refunding residents.

Meantime, council received a report updating them on the financial impact had on the City by COVID-19. The report shows the municipality could find itself saddled with a $5 million deficit come the end of September, that is if the economy continues to be impacted the way it has since the pandemic began.

City administration estimates there is already close to a $1.2 million hole.

Krejci explains that while $5 million may not necessarily jump off the page when you consider the City has a capital budget worth upwards of $200 million, he says to consider if you took that $5 million out of the $33 million operating reserve which has been built up over the City’s history.

“It would also be equivalent — if we had to make that up in property taxes later on — to a four per cent property tax increase,” he says. “And no matter what the cause is, a pandemic or just a desire to get tax rate down, when you sart using reserves to drop taxes, you’re in that same financial situation, and you have to eventually wean yourself off.”

Krejci says the City’s COVID-19-caused deficits will grow depending on several circumstances, including the duration of public health restrictions, the level of financial assistance from other levels of government, and the possibility of a second wave of confirmed virus cases.

City council will hold a meeting this Wednesday, May 13 to finalize the Tax Rate Bylaw.

*EDITOR’S NOTE: This story has been updated to reflect that Higham’s comments were made in response to those from other city council members, not the City Manager as was previously indicated.