Hat ranks average in municipal spending and business tax rates, according to News calculations

By COLLIN GALLANT on July 31, 2021.

cgallant@medicinehatnews.com@CollinGallant

The City of Medicine Hat is largely absent from a new report comparing municipal spending and business tax rates in Alberta, but would wind up in the middle of the pack, according to calculations by the News.

The Canadian Federation of Independent Business released its “Alberta Municipal Watch Report” this week. It say businesses cannot continue to shoulder inordinate increases in operational spending compared to population growth, as well as ranks basic “unfairness” in property tax rates for businesses compared to residential property tax.

For more than a decade the City of Medicine Hat has typically faired poorly in such reports, a situation often explained by administrators as owing to unique and additional expenses of operating a gas production company and civic power plant.

The latest CFIB report includes only minor mention of the Gas City, and doesn’t include in it a Nos. 1 to 17 ranking of major urban municipalities. (CFIB Officials with the group telling the News that the city’s particular accounting makes comparison difficult.)

However, a formula to examine property taxes, which is apart from other business operations, would place the Hat as No. 10 among 18 cities or counties with a large urban component.

The director of the city’s corporate services division, Dennis Egert, said the types of issues raised in the report are an ongoing concern for the city’s finance department, but all municipalities are different and assign tax burden with local landscape in mind.

“In terms of ‘tax ratio’ we having been trending down from a high point in 2008, so it is a priority for us in our decision making,” said Egert on Friday after he examined the report.

He cited substantial budget cuts this year, and ongoing discussions with the Chamber of Commerce, a group that was generally supportive of the city’s efforts in statements about the local business and residential tax comparison.

“We can certainly understand the concerns outlined in the report,” said Egert.

“We have a different calculation that we use, but the point is the same.”

Each year the city provides an examination of “Tax Fairness” as a direct comparison of mill-rates that are charged against assessment values.

In that equation, Medicine Hat’s ratio becomes 2.2, meaning commercial tax rates are 120% higher than those for single-family residential property owners, or about average among Alberta cities.

The CFIB report defines its “tax fairness” ratio as the commercial sector’s share of the assessment base compared to the share of annual property tax revenue it provides to a municipality.

In that regard, Medicine Hat’s ratio would be 1.67, meaning its business community pays 67% more than if all sectors were weighted equal to their share of the assessment base.

That average of major centres in Alberta is 1.98, and the Hat’s figure is lower than Airdrie, Lethbridge, Edmonton, several Edmonton metro areas, Calgary, and the R.M. of Wood Buffalo, (which led with an outsized 5.8 ratio in Fort McMurray).

Lower numbers come from Red Deer, Grande Prairie, Okotoks, and St. Albert, along with smaller centres, like Cochrane and Leduc.

Last spring, debate arose in council as the mill-rate was finalized with Coun. Kris Samraj arguing changes were needed and multi-family rates should also be adjusted.

Coun. Darren Hirsch said rates and share of tax burden is set by municipalities based on the unique make-up of their assessment base, with bedroom communities obviously differing from more industrial municipalities.

Spending side-bar

Two recent studies of municipal spending in Alberta’s cities state that Medicine Hat is spending the most and the least per resident.

Last year a study by Canadian Taxpayers Federation heavily criticized the city’s spending as the highest among cities in the province, but included energy and utility projects that local politicians say inflated the figures and skewed the comparison.

In a recent report from the Canadian Federation of Independent Business on operational spending growth, Medicine Hat was found to have the highest growth rate in bare expenditures over the last 10 years.

But, it also winds up at a point much lower in actual dollars per resident compared to other Alberta cities.

It states municipal expenditures here are 97% higher last year compared to 2010 levels, winding up at $1,937 per resident in 2020.

For comparison, Lethbridge’s figures are stated as a 24% increase over 10 years, but $2,527 per person.

Other per capita totals of note were $2,340 in Red Deer, $2,272 in Grande Prairie $2,317 in Calgary, and $2,322 in Edmonton.

The City of Brooks had zero increase from 10 years ago, spending $1,552 per citizen last year.

Cypress County kept spending generally in line with population growth, seeing an 18% spending increase (to $2,996 last year) and 16% population increase since 2010.

Redcliff’s population grew by 17% over 10 years and the town now spends 6% more at $1,575 per person than it did in 2010.

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