Medicine Hat shouldn’t be in power business,CTF says

By COLLIN GALLANT on June 19, 2020.

cgallant@medicinehatnews.com@CollinGallant

It shouldn’t matter that Medicine Hat’s public utilities are potentially skewing financial comparisons, according to a lobby group critical of government spending, because Medicine Hat should not be in the utility business.

This week the Canadian Taxpayers Federation released analysis comparison stating Medicine Hat spent far more than any other city in the province on a per resident basis, a total of $6,243. That’s double the average figure of Alberta’s largest cities.

In years past, local officials have criticized such reports as unfair, and not considerate of Medicine Hat’s unique accounting practices, a highly profitable power plant or interests in the oil patch.

When those activities are peeled out, they argue, municipal spending is about average.

However, CTF officials said the new report is meant to compare all money spent by city governments, which all comes in some way from citizens.

“It’s based on total expenditures and the report makes that quite clear,” said Franco Terrazzano, CTF’s director for Alberta.

“I’ve heard the argument before (about Medicine Hat) and frankly, I don’t care. They shouldn’t be in the business of business. I don’t care if they own a Walmart, cities should not have councillors or bureaucrats putting taxpayers money into all types of ventures that are risky and better done in by the private sector.”

Mayor Ted Clugston said that position is a “philosophical argument you could have all day long, but that’s not what the article is about.”

He said the report leaves the impression that cities spend too much, and only compares expenses, not revenues or income source.

“Compare revenue and we’d be No. 1 as well,” said Clugston. “It’s unfortunate, and it plays out in nasty politics.”

Medicine Hat’s gas and electric units – operations most other cities don’t have – spent $190 million in operating and capital expenses in 2019, but recorded $248 million in revenue.

Terrazzano told the News that it’s all money that is coming from taxpayers, and needs to be reduced.

“Municipal governments in Alberta are some of the biggest spenders in Canada and this report allows Albertans to see which municipalities are the worst,” reads the release.

Medicine Hat’s 110-year-old electrical generation department paid a $40-million dividend last year that was split in to a long-term savings reserve as well as a fund to offset tax increases as the city rebalances its budge.

Only Calgary and Edmonton are related to power production entities and through subsidiaries that have separate accounting.

The CTF study cites Alberta Municipal Affairs data as a the source for comparative data.

Based on total expenditures Medicine Hat’s figure $6,243 per person in spending would be $1,000 per year higher than the next closest city, Wood Buffalo (Fort McMurray).

The 2019 City of Medicine Hat financial report states that net expenditures totalled $395 million but notes that gas and electricity utility account for 30.9 and 17.4 per cent of spending, respectively, or $190 million in total.

The adjusted numbers would mean Medicine Hat spent $205 million, or about $3,250 per person on general government and utilities that are common, like water and sewer service and garbage collection.

The lower figure would place local per-capita spending as sixth highest among Alberta’s 14 cities with population of 30,000, behind Fort McMurray, Lethbridge ($3,965), Strathcona County-Sherwood Park ($3,787), and Red Deer ($3,544).

Edmonton ($3,116) and Calgary ($3,044) were Nos. 7 and 8, respectively. Airdrie was the lowest at $2,172.