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By rdnewsNOW Staff

$18 MILLION DEFICIT

Red Deer releases draft 2025 budget

Nov 6, 2024 | 10:20 AM

The City’s administration team has released a draft of the 2025 Tax Supported Operating and Capital Budgets, which residents are encouraged to review on the City’s website ahead of budget debates taking place Nov. 18-22.

Administration is proposing a 2025 Capital Budget plan totalling $93,384,000 and is recommending a principle approval of the 10 Year Capital Program. A full list of projects included in the capital budget is available in section four of the budget.

The drafted 2025 operating Tax Supported Budget totals $512,371,612 and to balance it, just over $18 million in changes needs to be made.

“As we’ve been signaling throughout the year, our city is facing significant financial pressures as we approach this budget,” said Mike Olesen, Growth and Finance General Manager. “Simply put, our current path remains unsustainable and it’s critical that we change our course to ensure our long-term financial health. The budget we are presenting is reflective of this urgency and considers the options available to council to balance the budget.”

There are a few different options within council’s control that can be leveraged to address this deficit. Administration recommends the following options for council to consider:

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1. Generate gross tax revenue increase of $18 million: City representatives say a projected $18 million boost in tax revenue would help address past financial challenges and support a more forward-focused approach. This would represent an 11.25 per cent tax increase.
2. Prioritize services: By approving proposed service level adjustments, the City could reduce expenses by approximately $3.4 million, focusing resources on core municipal functions that matter most to Red Deerians.
3. Organizational efficiency: Administration says it will continue efforts to assess and optimize resource efficiency in an effort to lay the groundwork for long-term cost management.
4. Achieve a positive variance in 2025: The City aims for a positive budget variance by year-end 2025, which would contribute to building reserves through one-time savings.
5. Focus advocacy on future funding: Red Deer would emphasize advocacy efforts at the provincial and federal levels in an effort to enhance support for municipal infrastructure and growth and ensure future sustainability.

“We have fallen behind. This is due to years of low tax rates that have not kept up with the increase to our expenses, compounded by reductions in revenues and grants. Increasing our tax rates, would still have Red Deer competitive with lower tax rates than the peer cities, Calgary, Edmonton, Lethbridge and Grande Prairie,” said City Manager Tara Lodewyk. “We are at a pivotal point where we can close the gap that has been created or continue to fall further behind. We are repeating history. Our history has shown that when we hold tax rates low by using reserves, we end up facing larger increases in the following years and taking reserves to critical levels.”

“Administration is proposing reducing expenses by $3.4 million in 2025 and is committed to continuing to find ways to save dollars to help close the gap and to create a path toward sustainable finances for Red Deer,” added Lodewyk.

The City offered community engagement opportunities in the spring and fall this year and council will be considering the feedback received as they debate the budget. A summary of that feedback is available in a What We Heard Report.

The budget debate will take place Nov. 18-22, and residents can watch the livestream online.