City accounting supervisor Aaron Hoimyr discusses the proposed city budget at a special council meeting on Tuesday evening.--News photo Collin Gallant
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Cost containment measures totalling $2 million in departmental budgets are already baked into a proposed tax increase of 5.6 per cent in each of the next two years, city staff told councillors who have called for lower increases in the 2025-26 city budget.
Some further work, reduced capital plans, new revenue and pushing off the long-promised end to a structural budget gap by raising taxes will only offset falling revenue from the now-collapsed Alberta power market, city budget lead Aaron Hoimyr told a special budget session of council on Tuesday.
“The effort this year was to hold the budget at 2024 levels and ask managers to mitigate that (increased costs),” said Hoimyr to begin a three-hour council of the whole meeting to outline rate-based utility business plans and update council on a request made in July for a lower tax hike.
Cost mitigation has largely been realized, he said, though $2.6 million in “service level adjustments” would be enacted next year.
“There are areas where we will easily reduce (costs) with minimal impact to residents,” said Hoimyr.
City manager Ann Mitchell says that will be finalized after a service-level survey is done, but staff should be credited to this point for holding budgets and essentially negating the impact of high inflation.
Tuesday also heard non-energy utility budget proposals that could add 1 per cent to residential bills and 5 per cent to commercial account fees in 2025.
“It’s an austerity budget,” said business marketing analyst Jasmin Gross.
Utility budgets are funded by fees. They don’t affect taxes, but utility profits provide dividends and municipal income that, along with tax revenue, balance city expenses.
The lengthy explanation of cost containment in utility areas coloured the municipal rate conversation.
“It’ll be a harder slog than we thought,” said Coun. Robert Dumanowski, who chaired the meeting as Mayor Linnsie Clark attended via video conference.
“It seems that any further reductions could prove very difficult and could have consequences in the future (causing) huge swings in future budgets.
“For me it’s a wait and see, but I’m comforted that staff are doing that deep dive to find any and all savings.”
Clark said during general discussion that she wants assurances that council will be apprised of service impacts when costs are cut or contained.
The municipal budget will be discussed in two weeks, after the energy production budget is taken up next week.
“We’ve only seen one of four and we’ll need to see them all,” said Coun. Andy McGrogan.
“I think staff are working hard. It would be great to come in a lot lower … but I’m encouraged, rather than discouraged.”
Finance officials say a steep drop in power profits this summer leaves the city trying to make up an additional 6.6 per cent in revenue compared to assumptions earlier this year, largely due to lower electricity grid sales. (The financial report comprising the summer power market is due today).
That’s above a proposed 5.6 per cent bump outlined earlier this year – a number called too high at capital budget meetings in June and July.
Council sent staffers back to analyze reductions to bring the number back at 4.5 and 3.5 per cent.
To bring in a 3.5 per cent increase, about two points lower than proposed, an additional $8 million in cuts would be required, said Hoimyr.
That is equivalent to the entire operational requirements of Echo Dale, Big Marble Go Centre, pools, rinks and the Transit department, or half the staffing costs of the fire or police services.
Hoimyr said that since the summer, finance officials and department heads have effectively offset 10 new proposed city positions by eliminating or leaving vacant 10 others.
A capital budget request has been reduced by $11.7 million, which will preserve the capital reserves and allow the city to extend the use of the reserve to make up a stubborn, decade-old budget gap left over from now defunct gas production profits.
It was to be erased by a portion of new tax revenue in 2025, but that end date would be pushed to 2028.
“It’s warranted for a number of reasons,” said Hoimyr. “Financial reserves are in good shape and that allows us to extend it and allows us to provide more stable tax increases to residents.”
