The sun glints though the windows at Medicine Hat City Hall. -- News file Photo
cgallant@medicinehatnews.com@CollinGallant
The effort to make the city budget “Financially Fit” will get faster, city hall officials confirmed Wednesday.
That largely confirms reports in the News last week, when officials outlined economic “headwinds” that could erase years of work to cut reserve spending out of the operating budget.
It also reveals that the city will seek a zero per cent tax increase in 2021 through layoffs and cost cutting, when a four per cent hike was originally slated.
“We need to bring our expenditures in line with our revenues,” said chief administrative officer Bob Nicolay. “We can’t rely on our reserves and we are determined to avoid resorting to excessive tax increases to address our budget gap.”
To accomplish that, budget planners will “accelerate” the Financially Fit budget plan in a December presentation on adjustments to the coming year’s budget.
The over-riding budget plan was launched in 2016 and originally aimed to make up $23 million in revenue that disappeared when the natural gas dividend dried up.
That gap – which shrunk to about $15 million in 2019, due to annual tax increases, higher fees, facility closures, altered programs and a wage freeze in 2018 – could grow to $27 million next year.
The figure was discussed by city councillors at this week’s meeting, but not fully explained to reporters.
At that point, councillors rejected an initial plan to double tax default rates that would raise $400,000. A full review of city fees is underway, and a general 6 per cent increase in permits and building services fees was discussed at committee on Wednesday.
The new financial urgency, say officials, is needed due to general inflation, added pandemic costs, lower revenue in a bad economy and the prospect of further provincial funding cuts.
Assuming no tax increase, or any dividend from commodity-based business units, namely gas production and power generation, the city would need to pay one-fifth of its 2021 expenses from reserve cash.
But that also assumes no spending changes, no tax increases, or sources of increased revenue.
Nicolay outlined program reviews that would have an eye to shielding the majority of residents from program changes, but job losses are expected.
“The acceleration of the plan will include reductions in staff,” he said, adding not filling vacant positions and early retirements will be explored first.
Earlier this year, the city’s largest union, the Canadian Union of Public Employees, with 800 members, agreed to a two-year wage freeze though to 2022. Managers and out-of-scope workers have followed suit, but four other contracts, with police, fire and electrical workers, are expired.
The city will receive up to $7.5 million from the province and Ottawa in emergency operating “stabilization funds” related to changes in costs and revenue due to the COVID-19 pandemic. However, that only covers expenses up to the province’s financial year-end in March.
This year, council voted to use $3.9 million in additional reserve money for a one-year cancelation of a 3.5 per cent tax increase.
