Red Deer may see 2024 property tax increase of seven to nine per cent; city explains breakdown

However, the City says due to “unprecedented” challenges, they had to take a second look at this year’s budget, requesting an amendment of $16 million to offset the increase in expenses.

Some challenges include revenue shortfalls of roughly $8 million compared to initial projections, less provincial funding, increasing inflation, and a local economy slow to bounce back from the pandemic.

Demographically, Red Deer’s population increase has plateaued, with just 3.5 per cent growth over the past eight years, a decrease in permit values and lower rates of new dwelling developments compared to other cities in the province.

“When council approved the two-year budget in 2022, our economic reality was significantly different than it is now,” said Mayor Ken Johnston. “Like our counterparts across the province, we’re facing tremendous economic pressures that are making it increasingly difficult to balance costs and funding sources while also investing in the future of our community. At the same time, we also know these same economic pressures are affecting the household budgets of our citizens, so we need to be deliberate and prudent in our decisions.”

Mike Olesen, General Manager of Growth & Services, said other factors that impacted the budget include increasing costs with the RCMP contract, decreasing revenue from the 2020 change by Alberta Health Services in their Emergency Medical Services dispatch, and consumer behaviour changes around recreational and public transit service use.

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Olesen says the city has been using their reserves to supplement impacts on their budget, but the method is unsustainable and can lead to more drastic outcomes for the public if left unreplenished.

“That [2023] budget plan was leading on the use of reserves to balance itself as well. So even if we overperform that budget, we’re just using less of our savings to offset and that’s part of the issue that we’re needing to correct because if we keep doing that year over year, those reserves will run out and we won’t have them anymore and then we’ll have significant sticker shock at that time. So, the sooner that we deal with this, and the more balanced that we can get things over time, will help our impact to the community be much more balanced,” he said.

Operating Reserve Tax Supported (2024 Amended Operating and Capital Budget p. 12)

Rather than cutting on service levels, administration has recommended a blend of increasing tax revenues with a partial use of reserves.

City Manager Tara Lodewyk provided some context to the potential property tax increase, showcasing Red Deer’s tax rate history over the past 36 years. Ranging from zero to 14 per cent per year, the average rate change is 4.5 per cent while other municipalities sit between five to nine per cent annually, she said.

“I know tax increases are very personal to our citizens and they have an impact. For administration the budget is more than just the tax increase,” she said. “The budget implements a vision for our city and sets us up for growth. It’s a point in time reflection of our city’s financial health, and our budget determines how much citizens are paying for services we provide.”

Red Deer’s 36-year tax rate history (2024 Amended Operating and Capital Budget p. 11)

Citizens are invited to review the full budget documents are provide input at engage.reddeer.ca.

Council will deliberate the amended budget January 23-26, 2024. Citizens can watch the livestream at meeting.reddeer.ca.

To learn more, visit reddeer.ca/budget.

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by Alessia Proietti

Red Deer may see 2024 property tax increase of seven to nine per cent; city explains breakdown

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