‘Challenging budget’: Red Deer property tax rate increases amended to 6.15 per cent

“This is, without question, one of the more challenging budgets I have been part of in my time on council,” said Mayor Ken Johnston. “Over the last two days, we have had difficult conversations and in-depth debate on how to best situate our community for growth and success in a financially responsible way. Today, city council approved a budget that aims to strike a balance – a budget that considers the tax impact at a time when inflation is significantly affecting both our citizens and the City, while continuing to invest in the programs and services our citizens need and expect in Red Deer.”

PROPERTY TAX DEBATE

Due to inflation, two years of zero tax increases during the pandemic, and a strained use on operating reserves, the City recommended to increase the property tax, among other options, to balance the budget by roughly $16 million.

A particular concern was the depleting Operating Reserve Tax Supported (ORTS), used to manage one-time, unexpected emergent financial needs. While the balance is supposed to be around $35 million, it is expected to sit at roughly $7 million by the end of the 2023 fiscal year, and, although too early to tell, may be close to empty by the end of 2024, according to Mike Olesen, General Manager of Growth & Finance.

READ: BUDGET: Low reserves, repurpose councillor-specific budgets, high community engagement

During original budget deliberations in December 2022, a property tax increase of 4.1 per cent was approved for 2024, adding to $6,125,835 in municipal tax revenue for the City.

During this week’s budget, the City provided three options, each measured on an average home valued at $345,000 in Red Deer.

Current (2023): $2,514.26/year – $209.52/month
Original 4.1 per cent: $2,617.34/year – $218.11/month (+$8.59/month from 2023)
6.15 per cent: $2,668.89/year – $222.40/month (+$12.88/month from 2023)
8.66 per cent: $2,731.99/year – $227.67/month (+$18.15/month from 2023)
13.86 per cent: $2,862.74/year – $238.56/month (+$29.04/month from 2023)

Each tax rate increase was accompanied by suggested tax increases for the following four years in order to replenish money in the reserves. For the 6.15 per cent tax increase in 2024, increases of over 9 per cent would be needed over the next few years to stay financially afloat, with the ORTS still below zero.

Councillor Cindy Jefferies voted for the 8.66 per cent increase, noting the marginal monthly differences and the need to compensate for the large reduction in provincial funding. She sympathized with citizens’ financial difficulties but referred to her own experience growing up in an impoverished household.

“I grew up in a family that had to choose between lights and food, between wearing new jeans or having new shoes. I get it; I’ve lived it. My mom had to make some very difficult choices at the grocery store, almost every week, and man could she stretch a budget,” she said.

“But it costs money to keep the lights on, it costs money to keep the roads clear, it costs money to have the services that are in our city, and I’m not even talking about nice-to-have services, I’m talking about the basics. I can’t apologize for positioning our city to provide those services in a reasonable and respectful way.”

Councillor Lawrence Lee passionately agreed, calling the budget “reactionary”, and stressing that the suggested tax rate increases for all five years must be followed to be successful. He noted under this option, the max increase in the following years would be 8.6 per cent and said that council should have worked harder to cut costs during budget deliberations if they wanted a lower tax rate increase.

PROPOSED AMENDMENTS

Councillor Kraymer Barnstable voiced discontent with all three tax rate increase proposals as he put forward over $1 million worth of amendments to reduce the budget, all unsupported by council. They included 20 per cent from outdoor rinks, which would affect eight out of 37 boarded rinks in the city, adding that he has seen many unutilized even during the pandemic when recreational facilities were closed, 20 per cent from sidewalk repair, noting the increasing costs in asphalt and concrete, 20 per cent from turf maintenance, and five per cent from road maintenance, excluding the winter season.

Councillor Victor Doerksen proposed utilizing debt instead of the ORTS and directed administration to go back to the drawing board and find $6.8 million worth of cuts in operating expenses. However, Councillor Dianne Wyntjes said that could only be done by cutting employee hours.

A total of $285,000 in cost savings were approved, including:

Reducing the by-election costs by $100,000
Removing $139,665 for Protective Services restructuring (anticipated funds that were no longer needed and returned by administration)
Reducing the Ethics Advisor Integrity Commissioner budget by $20,000

With a new amount of $15.8 million to balance the budget, administration will take the $9.3 million from municipal property taxes and the remaining $6 million from various reserves.

WHAT’S NEXT?

Some other highlights of the amended 2024 budget include:

Greater Downtown Community Development Plan
Software maintenance increases
Emergency Services CAD System Refresh

Although flags were raised during the two pandemic years of zero per cent tax increases, Mayor Johnston believes it was the best way to respond to the stresses faced by the community at the time and looks towards administration’s pledge to reduce costs departmentally for the 2025 budget.

The City states a 6.15 per cent municipal tax increase for 2024 does not mean that each individual property tax bill will change by that amount; the final amount, which can be lower or higher, will be determined once properties are assessed and requisitions are provided to the City in the spring.

The City’s budget covers the essential services residents use daily, including roads, water, streetlights, recreation facilities, emergency services, and municipal police, among others.

“The budget approved by city council today considers the many external pressures we as a municipality face during times of higher costs, slower recovery, and reduced revenues. And we know we are not alone in this; we know we have citizens and businesses in our community who face these same pressures,” said City Manager Tara Lodewyk. “Administration provided a transparent and honest picture of our financial situation and the work ahead to change our path before it is unmanageable.”

For more information on the budgets, visit reddeer.ca/budget.

BUDGET: public transit ridership increase, parking revenues decrease

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by Alessia Proietti

‘Challenging budget’: Red Deer property tax rate increases amended to 6.15 per cent

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