Council approves four straight years of four per cent property tax hikes

By Collin Gallant on December 18, 2018.

cgallant@medicinehatnews.com @CollinGallant

The incoming four-year city budget aims to cut an operating deficit at city hall in half by 2022 by cutting costs and raising taxes.

Property tax increases of 4 per cent each year, with half dedicated to replace natural gas dividends that dried up in 2014, is matched by cost containment aimed at cancelling out general inflation on city finances.

New fees, service changes and a tight-fisted approach to new infrastructure to control debt was also laid out in a presentation for councillors during their final meet of 2018.

Corporate services commissioner Brian Mastel called the document “a delicate balance to remain fiscally prudent while providing services people require.”

“I’m confident that it’s attainable, but a collective effort from council and the community will be needed,” he told reporters earlier in the day. “It’s the crux of the Financially Fit model to give residents a sustainable budget.”

Before the two-year budget was passed in 2016, the city embarked on the Financially Fit budget process, which aimed to strip resource revenue out of the municipal budget and make up the $23-million difference.

Under the new plan, reliance on reserve money would drop from about $15 million in 2018 to about $7 million in 2022, reducing the budget’s dependence on commodity revenue to just 5 per cent four years from now.

It does come however, with planned four per cent tax increases in each of the next four years. For 2019, that would add about $99 per year to the tax bill of an average home, assessed at $266,300. That increase also includes an assumption of 0.5 per cent organic in assessment growth.

Councillors passed the budget with a vote of 9-0.

“We’ve considered it very thoroughly,” said Coun. Julie Friesen.

Coun. Phil Turnbull said budgets will be reconsidered if business conditions worsen or improve.

“We understand the problems, but there aren’t any easy answers,” he said.

The tax increase would raise Medicine Hat’s combined tax and utility cost for an average home to about $4,600 per year, or about $500 less than Lethbridge’s figure in 2018.

City finance general manager Dennis Egert said the cumulative effect shows Medicine Hat’s advantage is in place.

“It’s a big advantage for Medicine Hat, and it’s what likely attracted many residents to move here,” said Egert. “The dilemma is that it costs money to provide services.”

Along with tax increases, there are cost reductions, which planners say eat away at the deficit from the expense side and lessen the need for even bigger tax increases.

During the 2017-18 budget period, the city cut $2.8 million in general spending, plus found $2.4 million in other areas, such at closing the Medicine Hat Arena and a wage freeze in 2017 from most employees.

They also raised fees and charges to residents to collect an additional $1 million, and a similar amount will be raised the final year of the new budget.

During the incoming budget, the city will also collect an additional $3 million per year in 2022 from the coming municipal consent access fee, and $1 million in “new revenue” from scheduled fee increases and elsewhere. They aim to by year four save $1.8 million in “innovation” in service delivery and adjust operations to save $1.6 million, while $2 million in general cost containment would offset inflation.

The plan still requires $44 million in spending of reserve cash to balance the budget.

It also outlines infrastructure spending of about $26 million in each of the years, about half paid for by grants, and much aimed at replacing aging infrastructure, such as storm drains and roads.

About $9 million of the four-year total will be spent on financial audits, a new data centre for city hall, a $1-million upgrade at the Strathcona Centre and minor amounts on parks upgrades.

Total city debt is expected to rise from $347 million in 2018 to $397 million in 2022, but the amount will actually shrink slightly when compared to a debt limit set against city revenue. That figure will remain below the 50 per cent mark budget assumptions hold true.

Outlined operational spending increases include $1.5 million for facilities operations, mostly for the expanded Family Leisure Centre and re-opened Veiner Centre, expected wage and general inflation of $8 million, fuel expenses and larger development subsidies.

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