(rdnewsNOW file photo)

By Alessia Proietti

Potential 4.7 and 4.3 per cent tax increases

Council sets guidelines for next multi-year budgets

Mar 29, 2022 | 1:43 PM

Red Deer city council has approved nine guidelines for administration to use while building the 2023-2024 budgets, including a potential property tax increase of up to 4.7 per cent next year.

“Going into today’s discussion, we anticipated seeing recommended increases throughout the different revenue streams that fund our budgets. We also knew that those increases are reflective of the increase in costs of doing business over the past several years,” said Mayor Ken Johnston.

Administration and council discussed the financial condition of the organization and economic forecasts such as inflation. The following nine budget guidelines were approved by council:

1. Property tax increase of 4.7 per cent in 2023, and 4.3 per cent in 2024, adding to approximately $6.597 million in property tax revenues and $6.482 million in property tax revenues, respectively.

2. Capital amenities and growth contribution of 1 per cent for 2023 and 2024. The contribution was 0.5 per cent for 2021 and 2022.

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3. User fees and charges to be reviewed and implemented in 2023 in compliance with council policy.

4. One time funding in 2023 and 2024 of $750,000 per year to support Council’s Strategic Plan implementation.

5. Explore utilities revenue, and what would be required to achieve a utility dividend of $3 million in 2023 and 2024

6. Increase reserve levels.

7. Change the Capital Contingency Policy to allow the city manager to address new projects from a maximum of $50,000 per project, up to a maximum of $200,000 a year.

8. Bring forward an operating contingency policy, like the Capital Contingency Policy.

9. Bring forward a tax supported operating reserve policy for emergent and urgent issues.

READ: Council to consider multi-year budget guidelines

With the average home in Red Deer assessed at roughly $355,000 paying approximately $194 per month in municipal taxes, the proposed increases would add around $9 per month, or roughly 30-cents per day to a municipal tax bill

Over the past two years, The City allotted a zero per cent increase in municipal property tax revenue throughout the pandemic by dipping into the operating reserve tax supported (ORTS), including $5.4 million utilized for 2022. Staff reductions totalled $5.19 million over the two years, some of those coming through early retirement offers accepted by 58 employees, according to Interim City Manager Tara Lodewyk.

With the need to increase revenues, administration recommended the use of $3 million from the ORTS to minimize the proposed tax increase hike on residents, with hopes to start putting funds back into the reserve by 2025.

The City also recommended no new capital projects for the following two years in order to minimize costs and complete current projects whose deadlines were postponed by the pandemic.

“We are going to build budgets that maintain our service delivery and our assets, respond to community growth, while replenishing our reserves that have taken a hit the last couple of years,” said Lodewyk.

Councillor Vesna Higham proposed an amendment for the property tax to be up to 3.5 per cent for 2023 and 2024. Along with Councillor Kraymer Barnstable, both proposed a reduction in City expenditures such as minimizing mowing of public grass lands and non-urgent road repairs.

“Just because everything is going up, I agree with Councillor Higham that, it doesn’t give us the green light to add to everyone’s concerns,” said Councillor Barnstable.

Councillor Lawrence Lee was opposed to the amendment, expressing council had the opportunity to increase taxes gradually starting last year to avoid “sticker-shock” in 2023, as he had proposed.

Councillor Cindy Jeffries also opposed, stating the taxes are necessary to pay for services residents use daily.

“The other part that I think sometimes we forget is that when we use our City services, they’re not always visible. You turn on the shower in the morning and the water is there or the tap to make a pot of coffee and the water is there and I don’t have to pay for that every time I use it,” she said.

The guidelines allow administration to recommend increases to the revenues that The City has control over such as taxes, utilities, user fees and charges to balance the expenditures required to maintain services.

“We continue to find efficiencies and innovative ways in what we do. This is more important than ever with the increase in costs of doing business,” said Lodewyk. “Red Deer has maintained a lower-than-average level of overall property taxes than comparable cities in the province, which is something we’ll also continue to aim for.”

Administration will develop the draft multi-year budgets in the coming months using the approved guidelines. In November, council will have the opportunity to review and approve the 2023-2024 Operating and Capital Budgets, as well as the Operating and Capital Plans.

See the FAQ for more information about the budget guidelines approved.