City scoffs at CTF report, and the idea that it shouldn’t be in business

By COLLIN GALLANT on June 20, 2020.

cgallant@medicinehatnews.com@CollinGallant

City council members are taking issue not only with a report they say unfairly paints Medicine Hat as the highest spending city in Alberta, but also with the author’s rebuttal that Medicine Hat get out of the utility business if it skews the numbers.

This week the Canadian Taxpayers Federation stated that, based on bare expenditures, Medicine Hat spends thousands of dollars more per person than other cities in the province.

City administrators released analysis Friday stating its unique utility division and gas production business shouldn’t be included when comparing municipal services budgets to other cities.

That came a day after Mayor Ted Clugston derided the CTF report as a political exercise, and city councillors contacted by the News said it painted an inaccurate picture of city finances.

Coun. Jamie McIntosh said he was surprised by the lack of context in the report that only examined expenses without reference to revenue or localized conditions.

“It’s in no way apples to apples (comparison) … and what I struggle with is the fact they did so little research before putting out something that only frustrates people,” said McIntosh.

He said the lack of information raises emotions, and talk about utilities distracts from municipal operational and spending reviews that are underway.

“What citizens should know is there are areas of our city, like the Canalta Centre, like the Veiner Centre (where operating models are being reviewed), that are costing taxpayers, and we need to keep looking at those things.”

Alan Rose is the head of the Medicine Ratepayers Association, which formed last year to lobby the city and is aligned with the CTF. He has often argued that separating the utility division’s accounting would give a more clear financial picture to residents.

“If they don’t want to count the expenses, they shouldn’t be counting the revenue,” he told the News on Friday. “It gets cluttered … but generally we do agree that the city should be in business.”

He also said the report shows the city hasn’t reacted to business conditions, and needs to do more to cut costs, and lower taxes.

Franco Terrazzano, the Alberta director of the CTF, told the News Thursday that utility spending is still money spent by government and since “there’s only one taxpayer,” even money like construction grants from other governments that cities spend needn’t be hived out of analysis.

Clugston said that format is meant to drum up angst, and that Medicine Hat consistently places high in benchmarking exercises that compare cost and service delivery against other municipalities.

In terms of business operations, the city has been criticized for its involvement in land development and the city is currently planning to abandon 2,000 gas wells it deems uneconomical.

Up to 2014 however, gas profits subsidized municipal revenue by $24 million per year – equal to almost $1,000 per property tax account. More recently, the power plant has produced $40 million in profit last year to help forestall major tax increases needed to replace gas revenue.

Coun. Phil Turnbull, who chairs the energy and utility committee, said that record is indisputable, and the city is acting in a businesslike manner to boost revenue and limit liability.

“The business has been very, very, very good for the city for 100 years,” said Turnbull. “What we are doing is mitigating losses, which is what is going on in gas.”

The CTF report states that Medicine Hat spent $6,243 per person, about $1,000 more than No. 2 Fort McMurray and about double the average of cities with more than 30,000 residents.

Medicine Hat’s finance department released analysis Friday that states when only non-utility, municipal expenditures are included the figure falls to $2,555, over about one-quarter less than the average.

Even then, however, commissioner Dennis Egert said it is “inappropriate” to examine only expenditures out of context to services or revenue.

“Each municipality offers different services and amenities and municipalities vary substantially in terms of their participation in revenue-generating enterprises that typically have the effect of lowering the burden on taxpayers,” he said.

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