City notebook: More money, more problems

By COLLIN GALLANT on February 24, 2024.

cgallant@medicinehatnews.com@CollinGallant

It’s a popular opinion that Medicine Hat is behind the times on most things, but – popular opinion aside – it could be ahead of the curve when it comes to public finance.

That would seem like a good thing, but not without a certain amount of unpopularity.

This week area MLA and Premier Danielle Smith used a television address to tell Albertans that her keystone election promise to cut personal income taxes will be delayed.

Also, she outlined that the Heritage Trust Fund needs to grow about tenfold by 2050 – the date floating around for most net-zero carbon plans, including Alberta’s – as a planned investment fund to replace oil patch revenue in the provincial budget.

It’s lofty goal, potentially half a trillion dollars are involved, though, haven’t we heard it before?

A tax-subsidizing investment fund stocked with non-renewable resource income?

Like the one in Medicine Hat, you mean?

The one that sucks up profits from the power plant?

The one that’s mentioned whenever anything from bus fare to property taxes goes up?

Yes, the same, and Danielle Smith could soon sympathize.

The local version of the Heritage Trust Fund (known as the “Heritage Savings Fund” wink wink) involves $200 million of held power plant profits that are planned to pay returns into the city budget next year.

That’s after about seven years of deposits and several changes in scope, but city hall is confident $5 million annual payout, about 3 per cent of assets, could continue indefinitely without inflation eroding the fund.

But, it was also red to a bull during last year’s utility rate shock and then again when council approved a 4 per cent property tax hike in 2024.

It’s deja vu, not just of Smith’s proposed it in 2012 election as Wildrose Leader. Other premiers have promised to stop raiding the cookie jar and grow the fund.

We all know the handcuffs Alberta governments face about not raising taxes (certainly not of the sales tax variety) and not running deficit.

In 2015, Medicine Hat officials perhaps seized Albertan’s brief disillusion with riding oil booms and busts, and began making the comparison of the city’s budget and the province’s financial situation.

It was plastered all over the effort driven by former mayor Ted Clugston to create the fund, save for the future, etc.

And you recall, of course that the city raised taxes only once in the 1990s while ratcheting up how much gas revenue was poured in the municipal budget.

It was up to a set $24 million a year (the city has about 24,000 properties) in the early 2010s when gas market capsized and reserve cash was making up the difference.

Ten years later the average property tax bill is about $1,000 more per year (see above figures).

Just how the famous bumper sticker about another oil boom will become provincial government policy could be laid out in the budget coming this week.

How any government will maintain fiscal discipline the next 27 years isn’t so clear.

So far, reaction to Smith’s announcement appears muted.

Eyes will roll among critics, of course, the election was only nine months ago.

An aside is an interesting note about how little chatter there is among UCP MLAs about the Smith announcement, especially the tax matter.

Typically they’d have talking notes ready, but, alas, it’s crickets.

Quick ones

– For those scoring at home: former city natural gas GM Kent Edney is leaving his position as the CAO of Brazeau County (think Drayton Valley area) to join the City of Chestermere. If you’re interest in the vacant job, talk to Todd Sharpe (the former Hat parks GM) who is now doing headhunting.

– Saskatchewan is now hiring election workers ahead of a planned election in October.

– The “Coldest Night of the Year” fundraiser and homeless awareness walk put on the Mustard Seed will take place Saturday.

A look ahead

A report by the parks department will look into the year passed and the year ahead on Monday. The Alberta Legislature’s spring sitting will commence on Wednesday. Thursday is Leap Day for those who celebrate.

100 years ago

British interests could invest as much as $5 million to exploit the Many Islands Lake gas fields by 1926, the News reported this week 100 years ago.

The Sarnie Oil and Gas Co. Owned the rights to the fields northeast of Medicine Hat, and believed as much as 500 million cubic feet per day could be exported from the region. A carbon black and gasoline plant was also proposed.Debate on the new liquor control act lingered into a fourth week in Edmonton with some MLAs now pushing for sales at cost from government distribution centres. Alberta Liquor commissioned R.G. Dinning scouted for locations in Medicine Hat, Lethbridge and Blairmore.

The rink of George Pingle won the grand challenge title at the Medicine Hat bonspiel.

Collin Gallant covers city politics and a variety of topics for the News. Reach him at 403-528-5664 or via email at cgallant@medicinehatnews.com.