City still seeking ways to close budget gap

By Collin Gallant on February 28, 2018.

cgallant@medicinehatnews.com @CollinGallant

As most Canadians were awaiting the federal budget announcement in Ottawa on Tuesday, city administrators were outlining how they’ll build the next municipal one to further close a multi-million-dollar revenue gap.

“Financially Fit for the Future” is a 10-year-plan launched in the 2017 and 2018 city budget. It originally aimed to find $23 million in operational savings and new tax or other revenue to replace gas dividends that once paid one-fifth the city budget.

Over two budget years, cost cutting and tax hikes have resulted in more than $7 million, but still $16 million in reserve cash was spent this year to make up the difference.

On Tuesday, finance officials told a city committee the next four-year budget is being prepared now to be in place on Jan. 1, 2019.

“We intend to re-energize some of the discussion in the community,” said corporate services commissioner Brian Mastel. “We’ll discuss some of our successes (in 2017-18) and next measures to further the plan.”

The plan involves seven areas where the city can either save money or make more money, including trimming services or raising taxes.

The philosophy however, is that money found through cutbacks or cost containment would limit the need for tax increases to balance the budget.

The first “Financially Fit” budget was written after a major public engagement campaign, and planners are now devising a new consultation process.

They will begin with a booth at this weekend’s Home and Garden Trade Show, and will continue with some events and open houses this summer and fall.

“I get a sense from the public that they get it and they support it,” said chair, Coun. Robert Dumanowski, adding that cost reviews and cuts — such as closing The Arena and seeking wage freezes — were a major departure for council.

“It’s a long protracted process that council has already moved on, but more is needed.”

Coun. Darren Hirsch said that while Hatters may understand the financial numbers, the consequences may not have “sunk in.”

“It’s the reality that we’re in, but I’m not sure it’s resonating with people,” he said. “We have to dispel the notion that we can have high levels of service and low taxes. Maybe that was possible when we had energy dividends, but we’re not in that world anymore.”

The city’s petroleum and powerplant are forecast to return at least a slight profit this year, though most of that cash would be destined for a new Heritage Savings Reserve.

Administrators warned several years ago that operating budget’s should not include unpredictable resource revenue.

Committee member Coun. Brian Varga said program cuts are difficult to consider but, “We have to look at everything again, because the amount of money is not going away.

“We have to look at every indicator. People are going to ask what we’ve done (on costs), if we’re asking them to pay more.”

Some program changes proved extremely unpopular. Route changes to the transit system would have saved about $600,000, but were reversed by council shortly after they were implemented last fall.

Information released at the meeting states that over two years the city has collected $1 million more in user fees, $3 million more in taxes and $3 million in investment income. It’s cut $2 million in new proposed spending and another $1 million in general programming.

Over the same period, $35 million in reserve cash was needed to balance the budget.

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