Property tax hike kept to 3.5%

By COLLIN GALLANT on December 17, 2019.

cgallant@medicinehatnews.com@CollinGallant

A property tax increase in Medicine Hat for 2020 will be slightly less than projected thanks mainly to a bigger tax base, and the use of more reserve funding next year.

While rolling out the amended budget, officials told Monday’s city council meeting that the recent provincial budget means $900,000 less in funding, but that is offset by provincial changes that allow cities to fully tax cannabis facilities, like the Aurora Sun project.

Continued cost containment efforts, higher city and utility fees, spending reviews, along with a set of 4 per cent yearly tax rate increases could still replace gas dividends and fully balance the city budget by 2026, said administrators.

“It’s a challenge that will require work of politicians city staff and citizens,” said corporate services commissioner Dennis Egert.

“At the end of this (four-year budget) we’ll still have to find $7 million (a year).”

Councillors voted 6-2 in favour of the changes, which if they hold true with the spring tax rate is set, would reduce the expected tax increase for the average home by about $11.

Mayor Ted Clugston said the difference may be nominal, but provides a measure of relief while sticking to a larger budget plan to reduce general dependence on utility revenue or reserve funding.

“We’ve made some good progress,” he told reporters after Couns. Kris Samraj and Darren Hirsch argued the increase should stay at four per cent. “Councillors are trying to do the right thing, but there are some good things happening right now.”

The city’s four-year budget covering 2019 to 2022, calls for four straight rate hikes of 4 per cent to help replace natural gas dividends while cost containment and other sources of revenue are sought.

Monday’s update was called for following the provincial budget and changes to the city’s utility and gas production division outlook. Typically, assessment growth is announced in the spring when millrates are adjusted, but last month the province announced cannabis greenhouses would be charged as non-residential properties, rather than partially exempted agricultural buildings.

The 0.5 per cent rate change equates to about $400,000, or the same amount that’s being added to next year’s withdrawal from the Tax Stabilization Fund. That was created to help phase in changes over 10 years.

“I won’t support it if we’re simply adding to a $15-million deficit,” said Samraj. Keeping the increase to 4 per cent would “be a more honest way to say we’re in a big hole.”

Hirsch as well said that the province’s changes funding negated a potential windfall from new greenhouse taxes. Since there was now change to the city’s bottom line, he’d prefer the focus turn to city spending.

“It’s an influx of cash only to have to turn around and cut a cheque to Edmonton,” he said. “It’s net zero.”

Coun. Jamie McIntosh said council committed to a hard stance on the need for standard tax increases while hoping the local economy would improve thanks to civic economic development efforts.

“We’ve yet to see the fruits at this point and people are hurting,” he said in support of the 3.5 proposal.

In an unusual step, the head of the Medicine Hat Rate Payers Society, was allowed to address council after the presentation, but before voting. Its leader said more should be done to cut spending, and he would like to see a zero or tax reduction.

“It’s like saying you’re saving money by taking it out of your savings account instead of chequing,” said Alan Rose, whose groups wants greater access to city budgets and audit city operations.

Coun. Phil Turnbull, who has often called for spending reviews, told Rose that he welcomed constructive input, but councillors and administrators are working hard.

He felt the plan was balanced, and the city’s strategy to bolster development could offset the need for large tax increases or larger than needed cuts.

“We don’t want to push to hard to fix a problem that might want to fix itself,” he said. “We’ve made some progress and I don’t think we’ve seen our last budget amendment (before 2022).”

Costs are key, say councillors

An updated city budget won’t see major public program cuts.

The city expects to gain $1.6 million from a variety of efforts at the departmental budget levels.

It maintains an original budget goal of finding another $2 million from “innovation” in program delivery.

Spending reviews are slated for items like fleet services, the city’s insurance coverage that won’t affect services that are provided to residents.

“There have been some exemplary efforts,” said chief administrator Bob Nicolay. “We’ve tried to make fundamental changes, but when we touch things that are dear to Medicine Hatters, things they expect, there is a reaction.”

Two years ago, the public pushed back against changes to the transit system that would have saved $650,000 per year, and council eventually reversed the changes.

The city is gathering feedback about spinning off the Veiner Centre seniors services to community management.

Already this year, cost reductions of $900,000 in public services division and $600,000 in the municipal works department have taken place, said Garth Glover, the city’s treasury manager.

Adding to credits in the update were poor investment returns, provincial grant changes and other expenses. About two-thirds of the provincial funding changes relate to a lower share of ticket revenue for cities.

That will be offset by $1.3 million in new taxes from new construction, $300,000 more in fees from power and gas distribution, $400,000 more from reserves and reduced working capital spending that is being replaced by a $900,000 grant from other government.

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