By Collin Gallant on October 13, 2017.
Low taxes, low utility rates and first-class city services have been the hallmarks of Medicine Hat for decades — it’s the so-called “Medicine Hat Advantage.”
For just as long, citizens and candidates for council have debated what’s the real advantage or whether it still exists.
This year’s election race is no exception, especially as City Hall works to erase a $23-million budget shortfall after energy dividends disappeared.
During a televised debate Wednesday, incumbent Mayor Ted Clugston defended cost cutting and tax and fee increases as necessary, but said the advantage is still in place, and challenged opponents to comment on the “MCAF.”
The little-known acronym stands for the “Municipal Consent Access Fee,” which utility companies often charge customers to pay cities for the use of power and gas line right-of-ways.
Since Medicine Hat is also the local power company, the fee isn’t applied.
“There have been no new charges in the last four years,” Clugston said on Thursday.
“All candidates talk about restoring services. I’m saying that comes with a cost.”
It was however, discussed as a major “lever” in the Financially Fit budget review as a potential source of income to replace profits from gas production and power exports.
In 2016 however, Clugston led a 5-4 vote against instituting the charge that would have raised $1 million annually.
It keeps the charge off utility bills but moves will require additional tax increases or spending cuts above those already called for under the plan.
“We’re in year two — there are hard choices,” he said.
His opponents in the mayor’s race say council has made poor choices since 2013, but also mostly said new charges or taxes are not the answer to the city’s financial situation.
Candidate Scott Raible said cuts proposed need to be carefully examined and should continue, but fees and other increases are not what’s needed. He’d rather see dollars made up by addressing “financial mismanagement” at city hall.
“Residents pay taxes to have access to “increasing taxes, while increasing fees creates an unnecessary burden,” he wrote to the News.
Candidate Tom Fougere says he would favour tax increases to utility increases, because residents have a better ability to control bills and usage.
Candidate John Hamill has made a major issue out of utility charges, and has said local prices should be the lowest, not the average.
“The advantage certainly isn’t on the property taxes — they’re too high,” said Hamill. “People in business are struggling. The answer is to trim.”
The access fee now appears as “Zero” on local bills starting this year as a way to highlight that it and other fees are considerably lower than elsewhere in Alberta.
Utility department officials state the difference — all told — is about $600 per year on fees and charges. That’s apart from the bare rates for gas and power, which are set as the average price in the province.
A new dividend formula in 2014 essentially eliminated energy dividends of $24 million per year the next year, and this year $19 million in reserve cash will be used to balance the budget.
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