NEWS PHOTO COLLIN GALLANT Mayor Ted Clugston addresses a luncheon crowd at the annual State of the City Address at the Medicine Hat Lodge.
cgallant@medicinehatnews.com@CollinGallant
City administrators may need to adjust to a second provincial budget in four months following the tabling today of the Alberta government’s financial plan for the coming year.
The 2020-21 provincial budget will be presented this afternoon by Finance Minister Travis Toews, who last fall brought in a hard-line budget to arrest program costs in an effort to balance Alberta’s finances.
That led to late-year scrambling in some municipalities and agencies that faced lost revenue or expected increases and grants.
Coming back on a regular schedule of budget’s lining with financial years, the City of Medicine Hat isn’t expecting more substantial changes, but officials say they will have to study the ultimate effects of the complex document.
Mayor Ted Clugston said the City of Medicine Hat has a greater ability to “pivot” due to financial changes than other municipalities on its finances.
He also echoed a recent statement by the Alberta Urban Municipalities Association head, Brooks Mayor Barry Morishita.
“He speaks for municipalities in that we understand the province is trying to get to a balanced budget, we accept that, but however, it’s hard when it’s on the back of the municipalities,” said Clugston.
“When we get cuts we have to raise fees or taxes. It’s frustrating, but I won’t be too critical because I understand the need to balance the budget, so I’ll accept whatever happens.”
The last budget cited a report commissioned by the government that stated municipalities have the fiscal capacity to operate with less provincial money for operations and capital construction.
Chief among a variety of grant program changes last fall was a nine-per-cent cut over three years to the Municipal Sustainable Initiative, which last year provided $11 million to Medicine Hat for infrastructure projects.
Major local operating items included $600,000 less in lower police fine revenue due to the province changes in the share allocation to cities, $100,000 in lower social service grants, and a $250,000 reduction in grants the province pays in place of local property tax on provincial facilities.
The last item, referred to as Grants in Place of Taxes (or GIPOT), will be reduced a further $250,000 in the City of Medicine Hat’s case in the coming year according to the October budget, but new budgets could provide further changes and adjustments.
That late budget was required since none was passed before the 2019 provincial budget was introduced.
City administrators said it is unusual to prepare for two provincial budgets back-to-back, but they will make adjustments as needed.
The new document covers the year ahead, while the previous budget covered a large portion of the year that had already gone by.
“We’ll have some certainty about what to expect to see with grant programs,” said Dennis Egert, the city’s corporate services commissioner.
The effect of the 2019 budget on the city was outlined in a special presentation in late December.
However, administrators said new local property tax guidelines that made cannabis production facilities fully taxable were enough to offset much of the difference in 2020.
That, plus adjusting some payments from city utility operations and reserve accounts, resulted in a slight decrease in an planned four per cent tax increase this year. Final rates are set in April.
The city’s current budget, passed in late 2018, already called for cost containment and savings combined with a slate of property tax increases to overcome a structural deficit left when natural gas profits dried up. The budget requires $15 million in reserve cash to balance the budget this year, decreasing to $7 million in 2023.
