City seeks ways it can ease financial strain

By COLLIN GALLANT on March 21, 2020.

cgallant@medicinehatnews.com@CollinGallant

City councillors will ask for options from administrators to help ease financial strain related to a societal pandemic response plan that led to a flatline of business activity and layoffs this week.

An overarching plan may not be ready for weeks or months however, though details of federal and provincial aid are expanding almost daily.

This week the city added to an Alberta government measure for utility customers that ends the possibility and also any fees for customers facing disconnection for at least 90 days.

Mayor Ted Clugston told reporters on Thursday that while city hall acts on immediate health and essential services action, measures will come forward to help Hatters hurt financially.

“The No. 1 thing that we’re concerned about is public safety – life and limb – but I’m very, very aware of the struggles that our local businesses are feeling right now,” he said.

“It’s concerning – they’re wondering if they’re going to make it. There are announcements from the other levels of government, and hopefully we’ll be able to help out around here to.”

The provincial and federal governments both rolled out substantial packages that included a raft of measures earlier this week. They range from tax deferrals, lending, changes to employment insurance, student loan holidays, and boosting the Canada Child Benefits and GST rebate for low-income earners.

The two most obvious areas where the city could step in would be with property tax and utilities, though councillors the News spoke to said that leverage is not a short-term option and that targeted action is needed.

Property taxes are due in in late June – though the tax rate is set in April – and, already the utility payments for the hardest affected could be deferred until then as well.

Councillor Phil Turnbull said the city needs to align with quickly evening announcements from the province and Ottawa.

“We’re the third level of government and we have to do whatever we can to help,” he said, noting that broad property tax relief, potentially using more reserve cash to avoid a tax increase this year, is his first obvious choice.

“I will say that we have a rainy day fund, and there will never be a rainy day as terrible as this.”

Turnbull is among several councillors who have suggested for years that dividend policy that has led to a $30-million Heritage Savings account could be changed to give property owners a break.

The city has total reserves of about $300 million – not including operating funds or other money to be spent this year – but more than half relates to long-term gas abandonment and other amounts are restricted grants.

Other councillors felt it prudent not to discuss specific actions, citing that by tax time, the ground-level situation could be more clear and further programs by Ottawa and the province will likely be in place.

“Taxation and utility support are going to be essential,” said Coun. Jamie McIntosh. “Making quick decisions or announcements is not in the best interest of the city.

“Ensuring we take a well thought out approach, that is fully aligned with other levels of government, will serve us all extremely well as the crisis continues.”

Coun. Julie Friesen said the situation is obviously heart wrenching, and Hatters need help.

“We have announced some measures meant to reduce the pressure, and there are several more being explored and under consideration,” she said. “Since everything changes and evolves quickly, we need to be mindful that folks need assistance soon – not later, or tied to a lot of red tape and bureaucracy.”

No matter what there will likely be a number of changes to the city’s budget and spending plans.

Coun. Darren Hirsch said after Monday’s council meeting that the city budget, which had been revised in late 2019 to account for gas well abandonment and a cut in provincial funding, may change again.

“This is a complete, one-off situation,” He said. “But I’m eager to see the analysis.”

The city incurs some operating costs from the pandemic response, but may also receive funding for program delivery or unusual cost recovery.

The city is currently one-third of the way through a 10-year plan to ween city budget off profits at the now money-losing natural gas company. The city will use about $15 million in reserve cash this year to balance the budget, with a 3.5 per cent tax increase scheduled in 2020. Yearly tax increases are to boost revenue and eventually close the gap alongside cost cuts.

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