By COLLIN GALLANT on November 8, 2022.
Council members didn’t debate the proposed 2023-24 city budget on Monday, but said a new engagement process will see lengthy discussions before anything is adopted by year end.
“This will give us plenty of time before we begin deliberations,” said Mayor Linnsie Clark, stating that even with a “committee of the whole” meeting next week and a public hearing at council’s Nov. 21 meeting, the matter may be sent back and taken up in December.
“It’s an administrative proposal, so we’re not debating it tonight,” she told council Monday.
The budget plan calls for tax increases of 4 per cent in each of the next two years while increasing some utility fees that flow directly back to the city and using more investment income to balance the $148.5-million budget.
That comes after the previous council directed administrators to cancel planned tax increases in 2020 and 2021 as part of “COVID Relief” packages, before this council raised taxes 3.3 per cent in 2022.
Administrators said a return to normal operations coming out of the worst of the pandemic requires raising spending after reducing it along with operations, as well as facing general inflation in the 4 per cent range.
“We held the property tax increases to zero for two years,” said Dennis Egert, head of the corporate services division.
“The cumulative effect of that (on tax revenue) is $7.5 million annually. It was right for the time, and done for the right reasons, but there is pressure to catch up.”
The budget calls for tax revenue to rise from $80.8 million in 2022 to $89 million in 2023. During that time $15 million in reserve cash will be used to balance the budget, but that long-standing process could end in 2024, according to budget authors.
Controller Vanessa Bonneville said capital spending expectations of $41 to $46 million in each of the next two years comprises mostly maintenance and held infrastructure programs, not new construction.
“It’s roughly a return to normal for capital spending,” she said. “It ensures that anything deferred during COVID 19 gets done.”
City utility customers could see new rate options, and a new relief package, in the new year, and that’s before a major rate review – called for to deal with skyrocketing bills in 2022 – is due before council.
Before then however, residents will be able to speak at a public hearing later this month on a proposal to add “variable fixed pricing” for power and gas, as well as general rates introduced Monday.
Another amendment, by utilities committee chair Alison Van Dyke, will see officials bring fourth a utility relief package to consider alongside 2023 rates introduced on Nov. 21.
Council called for a general review of rate-setting earlier this year as Hatters complained loudly about record high power prices and rejuvenated gas prices. That won’t be ready until after rates are updated for 2023, however.
Along with default pricing, the city offers fixed rates set each year that are well-below current floating prices. If approved, the hybrid would contract price based on actual open market pricing plus a premium.
“This builds on the principal that Comco (the power plant and gas production units) act as a business consistent with industry peers,” said Rochelle Pancoast, head of city hall’s strategic management and analysis office.
She said a variable rate would add to customer choice, and better help the municipal business cover high costs it has incurred this year.
A new “variable contract rate” would work similarly for residences and small businesses as the current default rate for large industry. Most have set negotiated contracts, but some large commercial and street-lighting (condo) customers are on a default rates of the average grid price from the previous month, plus a premium of $20 per megawatt hour, or 2-cents per kilowatt hour.
A residential variable contract rate would use the same formula and prices, and for gas, the market average plus $1 per gigajoule.
Gas bought by the city for resale this year has risen in price as high as $8 per gigajoule, well above the city’s $4.35 fixed rate, saving customers $2.5 million cumulatively for every dollar of difference.
On power, the average year-to-date gird price in Alberta has been $146 per WMh, or 14.6-cents per kilowatt hour, compared to the contract rate of 8-cents.
Both fixed rates are also set to be reset for 2023.