December 14th, 2019

City gets $3.5M gas tax top-up

By COLLIN GALLANT on August 27, 2019.

Medicine Hat City Hall is seen in this undated photo. Medicine Hat is poised to receive an additional $3.5 million from a gas tax “top-up."

Six months later, Medicine Hat is poised to get an additional $3.5 million from a gas tax “top-up” that was written into the last federal budget.

Ottawa announced a one-time doubling of funds paid out to municipalities from the per-litre charge on vehicle fuel in March, but it is up to the provinces to administer the funds and determine payouts for the infrastructure funding program.

That schedule of payments is now public several months after the United Conservatives won the spring election. A list shows a near doubling of this year’s annual payment to a total of $7.15 million for Medicine Hat.

“It’s very good news that we’ve been waiting for,” said city finance commissioner Denis Egert.

“Now the question is what to do with it … It’s a matter of doing some prioritizing and figuring out best use (for the money).”

Across Alberta the increase totals $229.5 million that can be spent on capital construction projects in 18 categories.

Locally, with the 2019 construction season well advanced, it’s unlikely that any new projects will be started with the funds, said Egert. As well, the one-year-old current city budget is couched in terms of restricting civic construction projects after a robust campaign in previous years, making it unlikely brand new projects would be added.

For now, Egert and his team are evaluating how ongoing and approved future projects are funded to see if grant money could replace debt financing.

“If a project does qualify, it’s good any time that we can replace debt financing,” he said. “There’s a sweet spot (for carrying debt), and we’re now at a comfortable level.”

The municipal debt load is already decreasing year over year – the principal fell by about 10 per cent to $41.6 million this year. That is scheduled to tick downward for the rest of the budget’s 2019-to 2022 term.

The city’s municipal capital construction program totalled $26 million for 2019, considered low, and with most of the road and bridge works already paid for with other government grants, not debt.

Spending on other projects is also considered limited where the gas tax grant can be applied, such as public transit facilities, waste and potable water facilities, disaster mitigation, sports and recreation facilities.

It’s been city policy to direct grants as much as possible to municipal projects as opposed to utility projects, as utilities pay off debt via fees not municipal taxes. Since some utility users are located outside Medicine Hat city limits, it is considered a bigger benefit to residents.

Regional windfall

The jump in federal gas tax goes to capital projects in all Alberta municipalities, meaning Cypress County’s share rises to $866,000 after an additional $419,000 is added. The Town of Redcliff’s grant rises from $325,900 to a total of $632,800.

In the greater region, Brooks (which now will now receive a total of $1.63 million), Taber ($952,400), Bow Island ($230,800), Vauxhall ($138,000), and Oyen ($115,500), will also see near 100 per cent increases.

The program is available to all municipalities above a village, with a minimum of $50,000 paid out. Among the smallest municipalities, Foremost, Empress and Acadia Valley will each receive $100,000 this year.

Boost in Sask.

The increase was lauded in Saskatchewan in a federal government release on Monday, where municipalities received the first of two allotments of the calendar year.

Ottawa’s one-time doubling of the federal gas tax allotment will bring hundreds of thousands of dollars into southwest Saskatchewan this year.

The largest payment in the region nearest Medicine Hat, goes to the City of Swift Current, with an urban grant of $1.965 million, and another $243,200 for the surrounding rural area.

Maple Creek’s share of recent funds totals $261,350 for the town and another $136,400 for the rural municipality.

About $260,000 would go to the Town of Shaunavon and the surrounding RM of Reno, while Webb and area would receive about $132,000.

The Fox Valley area would see about $72,600 in total, Deer Forks ($26,500), Enterprise ($15,400) Big Stick ($17,400) and Piapot ($38,400). The total for the villages of Sceptre, Prelate and Richmound would be about $46,000.

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