Chamber calls for no tax increase ahead of Operating Budget debate

By Josh Hall (Twitter: @Vancan19)
January 4, 2017 - 3:35pm

The Red Deer and District Chamber of Commerce is calling on City Council to keep the purse-strings cinched when they debate the 2017 Operating Budget next week.

The proposed tax increase heading into debate is 2.51 per cent.

In a release, the Chamber says businesses paid more than twice as much in property tax in 2016 due to the 2.17 residential to non-residential tax ratio.

"Whether directly, or through rental costs, property taxes represent a substantial cost to the bottom-lines of Red Deer businesses," the statement reads. "If taxes are to increase, businesses capable of passing on additional costs will; however many are unable to and will find ways to reduce costs."

The Chamber fears this will lead to reductions in business and consumer spending and possibly further layoffs.

"Our economy continues to operate in a fragile state thanks to a moderate outlook for growth tempered by low oil prices and the additional costs that have been layered upon business such as the minimum wage increase, small business dividend increase, and now the carbon tax,” says Interim CEO Rick More.

“Avoiding an increase to municipal taxes would prevent another cost increase from being layered upon business during this uncertain time while improving the economic recovery, and increasing the attractiveness of Red Deer as a place to do business."

City Manager Craig Curtis says it's important to remember that one per cent of the property tax increase is for the annual capital projects contribution.

"Through our construction program, this will increase jobs in the area, so that is a fact that needs to be considered," says Curtis. "We're looking at the cost of some of our core services and assessing input from a whole range of bodies, some advocating for an increase, and obviously some advocating zero."

He also warns a zero per cent tax increase, like residents saw several times during the 90s, could precipitate higher increases in following years.

"It is true that it caused a deficit particularly in infrastructure which resulted ultimately in fairly major increases and a very, very high swing. That was as a result of a number of years of holding the line," Curtis says. "Last year and this year are the lowest increases in 15 years, and we've tried to come forward with a modest increase that maintains the majority of services.

According to Curtis, keeping transit and recreation fees flat and the carbon tax coming are all examples of the number of financial pressures currently facing the City.

Jason Stephan, President of the Red Deer Taxpayers' Association acknowledges there's no way for residents to escape having carbon tax costs being passed on from the City. However, he still believes there needs to be a culture change within City Hall which would see a zero-based budget.

"The population of Red Deer has decreased; this is a very challenging economic time for many individuals, and families and businesses in central Alberta. Many of them have tightened their belts," he says. "With a decrease in population of one per cent, the proposed increase in property taxes of 2.51 per cent is inconsistent with what families and businesses are doing themselves."

Stephan says that for a number of years, City operational spending has significantly outpaced population and inflation growth, as shown in this graph on the Association's website.

"It adds up. Over the long run, it hurts us and I'd like our city to be competitive and be the best it can be. If the City manages taxpayer money better, that helps attract families and businesses to central Alberta," he says.

"When final budget numbers are done, they can talk about well we saved a couple million dollars, and I guess that sounds good, but if you actually look from a percentage perspective of an operating budget, often these savings are less than one percent. Well I can tell you families and businesses are cutting their expenses a lot more than one per cent."

Stephan, who will meet with Mayor Tara Veer and several city councillors on Tuesday, says the path toward greater accountability at City Hall starts with Curtis himself.

"If the Operating Budget had just matched population growth and inflation since Craig Curtis came into the position of City Manager, our Operating Budget would be over $100 million less just this year," Stephan claims.

"What I'm saying is Craig Curtis gets a very good salary for what he does. In other businesses, CEOs have heard, 'Look this is a very hard time, you need to continue to run the business, but cut your expenses.' He and his other members in management need to look at how they can cut costs and still maintain service levels."

One example of Council approving unnecessary spending, according to Stephan, came during last year's Operating Budget debate. Council voted 5 to 4 to reinstate late night service on all Red Deer Transit bus routes.

The decision cost taxpayers $78,000 in 2016 and another $157,000 this year. Stephan claims less than 20 people use the bus at that time and it would have been cheaper for the City to give them all taxi vouchers.

"Taxpayer dollars are valuable and precious and we need to make sure we are getting value for money," he adds.

Dean Krejci, Chief Financial Officer with the City of Red Deer, says the City avoided property tax rate increases from 1995 to 1997 by dipping into the tax supported operating reserve. The City also reduced expenses scheduled for repairs and maintenance and eliminated the Auditor-General position.

"The issue with them pulling out of the operating reserve is you have an ongoing expense you're not raising the tax revenue for,” Krejci explained. “So in order to eventually fund that ongoing expense, you have to eventually get rid of the transfer from the reserve and replace it with property tax revenue, so it creates increases in future years because you have to wean your reliance from the reserves."

Krejci says it took 12 years for the City to recover financially from freezing property tax rates for those three years.

To bring the tax increase from 2.51 per cent down to zero, Council would have to find approximately $3 million in savings from a budget worth $357 million, according to Krejci.

Operating Budget debate begins Tuesday, January 10 after lunch.

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