City Notebook: Hey, it’s better than nothin’

By COLLIN GALLANT on June 6, 2020.

cgallant@medicinehatnews.com@CollinGallant

The old adage that death and taxes are unavoidable is maybe a bit too dark to mention these days, but a Medicine Hat city council strategy to provide one-year reprieve on tax increases provides some perspective, if not a ton of financial relief.

The average household will pay about what it paid in 2019 as far as the city’s part of the annual bill is concerned, and about $70 less thanks to the provincial government’s decision to hold off on a major increase in local education taxes.

But the annual death match to wrestle tax increases into submission usually involves quarter per centre points.

In the war on taxes, some people won’t have a problem arguing that a $70 decrease in one year is a pittance, while a $70 increase in another is beyond outrageous.

A business owner that was facing a $500 increase will instead pay $100 less. Hey, $600 is not peanuts, but it’s not even one full paycheque for an employee earning minimum wage.

It does however, highlight how little latitude the city has to really affect household finances by fighting tooth and nail to save one per cent, which is equal to about $20 a year to the average homeowner.

True, rate increases compound over time, and at four cent a year, a specific tax bill will eventually double over 15 years.

And deliberations on next year’s tax rate starts with an increase in 2020 built in. (The difference this year is technically “cancelled” by reserve funds; the actual rate rose).

And, the city’s much larger, budget problems are still there, too.

The city has been using reserve funds for half a dozen years to balance its budget as it chips away at a structure deficit caused by an utter lack of natural gas production profits that once poured $24 million into revenue.

This year, the amount was to be about $15 million, but the extra cash will add $3.9 million to that and stretch the 10-year plan to cut costs and ease up the tax rate to 11 years instead.

Another startling fact that’s been overlooked is the city that loves to talk about how big its bank account is simply could not afford a tax holiday this year, as some were calling for early on in the coronavirus pandemic.

Medicine Hat could have emptied out its tax reserve and the new Heritage Savings Account and still only cut this year’s tax bills in half.

That’s the math for a city budget that requires $82 million in tax revenue.

More assessment

If you’re scoring at home, the details of an accounting error that threw off this year’s city tax assessment forecasts should be registered as an E16. In December, finance officials said an internal mistake would put the assessment projection off by about $1 million (assessment is one part of the formula by which tax rates are set; the mill rate and amount required by the budget are the others). As it turned out, it was mentioned in this week’s millrace discussions, that the assessment value of the city’s Unit 16 power plant was counted twice.

A look ahead

Alberta Justice could announce specific programming in Medicine Hat aimed at tackling drug crime and drug addiction. A noon-hour press conference is set for Monday.

Collin Gallant covers city politics and a variety of topics for the News. Reach him at 403-528-5664 or via email at cgallant@medicinehatnews.com