Councillors meet at city hall Monday to go over a 2021 budget that seeks to cut $14.7 Million. --News photo Collin Gallant
cgallant@medicinehatnews.com@CollinGallant
A mid-term budget update will lead to major changes in Medicine Hat for 2021, eliminating two years of tax increases – likely at the expense of major facilities – and rearranging departments, as $14.7 million is slashed from city expenditures.
Debated at Monday’s council meeting, the amendments would officially cancel the 2020 tax increase, which was not charged, and eliminate a planned four per cent hike in 2021.
The resulting cuts would also dig into a structural budget deficit that the city has wrestled with for the last four years.
Calling it an acceleration of the Financially Fit program, corporate services commissioner Dennis Egert described it as a right-sizing of city government.
“It’s a significant response to the financial … headwinds that we expect to continue though 2021 and beyond,” he said during an overview.
“This budget reflects the current economic challenge.”
Councillors approved the report by a 9-0 vote, though the meeting agenda lasted beyond press deadline.
During discussion, Coun. Darren Hirsch echoed a brief statement from Mayor Ted Clugston that the plan is “exceptional.”
“It is bitter sweet, though,” said Hirsch, who enthusiastically endorsed the plan. “Our revenues were high, and they’re not there anymore, and our expenses have to be commiserate … We needed to save ourselves and I think we’ve done that with this budget.”
Coun. Julie Friesen called the budget a “difficult exercise,” but likened using reserve funds to bolster spending to “blowing through” a family inheritance.
“It’s tough slogging and nobody wants to do these things,” she said. “We’re no longer in a position that, at current spending and with decreasing revenue and grants, if we keep it up we’d be in serious trouble.”
Finance officials say the spectre of lower provincial spending, lower gas and oil prices, plus operating costs and economic effect of COVID-19, are putting pressure on the city. As well, said Egert, the city is about halfway through a 10-year process to cut reserve spending out of its budget process.
Launched in 2016, the general plan was to match cost cuts with hikes to taxes and fees to eliminate the $24-million gap left when natural gas dividends were discontinued.
The difference in the meantime is made up with reserve cash, and the gap shrank to $16.9 million in 2020.
The new budget plans to drive that down to $8 million in 2021, about $1.5 million less than originally planned.
The benefit to the average residential tax account to avoiding two years of tax increases (totalling 7.5 per cent, or $7.9 million) is about $180.
“This is a focus on execution,” said Egert, “those items that we can use to close that target.”
“The taxpayer desires lower property taxes. Looking (at municipalities) across the province, we’d be out of step if we weren’t doing this.”
Combining “surgical and across-the-board cuts,” department managers will now have to work with their budgets.
The budget calls for an 11 per cent reduction in total staffing costs, partly accomplished from an in-place two-year wage freeze for managers, non-union and inside, outside and transit workers. Police and firefighters will be asked to follow suit.
As well the city is seeking to secure up to 100 early retirement packages from the 1,100-person municipal workforce, and will leave vacant positions unfilled.
The Moose Recreation centre, the Crestwood Pool and Heights outdoor pool will close. Outside funding to the Public Library will be reduced, and membership in economic and tourism partnerships will be cut completely.
The measures also include:
– “Optimizing Police and Fire Services”;
– Expansion of the on-demand transit pilot project;
– Further adjustment of service levels and city fees;
– Review of supply and insurance contracts; and
– Review of business unit dividend policies.
An internal reorganization – the city’s third in five years – will formalize “Invest Medicine Hat” as its own division and establish an office of “Strategy and Efficiency.”
Some administrative costs will be cut, including the deletion of oil and gas accounting division.
Coun. Phil Turnbull said the taxation portion of the original plan, raising four per cent each year, wasn’t sustainable.
Coun. Robert Dunamowski said the changes are broad enough to deflect the impact to any one area of the city.
“There’s not a rock to uncover where’ there’s not some substantial change,” said Dumanowski. “There will be some pains and reductions and different ways of doing things, but I feel relatively good about this plan.”
Coun. Jamie McIntosh said the original 10-year timeline to fill the budget gap led to hard decisions being delayed.
“It will be difficult for people to hear that things will change in the community,” he said. “It puts us back on track.”
Coun. Jim Turner said he felt past budgets concentrated too much on raising revenue, but not the expense side.
“We’ve turned that corner,” he said.
