Vandy Bishop, treasury and insurance officer with the city, provides council a presentation on the Tri-Annual Management Financial Performance Report from Jan. 1 to Aug. 31.--NEWS PHOTO BRENDAN MILLER
bmiller@medicinehatnews.com
Medicine Hat is spending more than it is making. City staff say the reserve budget, or its ‘saving account,’ could be completely depleted within eight years if current trends continue and council maintains a 5.6 per cent property tax increase.
“This is not sustainable, This is absolutely not sustainable,” said Coun. Stewart Young as members received a presentation on the Tri-Annual Management Report Financial Performance from Corporate Services during a public meeting Monday as budget discussion continues at city hall.
Tri-annual reports are submitted three times a year and report data on city spending and revenues from January 1 to Aug 31 2025, divided into three main sections – Medicine Hat’s current financial environment, financial performance and items of interest.
During a presentation provided by treasury and insurance officer Vandy Bishop, she said, “We are currently spending more than we are putting in, suggesting that the city offsetting tax increases with reserves would not be fiscally responsible for a number of reasons.
“Stabilizing reserves is essential to maintaining the long-term sustainability of the city, and therefore should not be relied upon like they were in the past.”
Bishop says if this trend continues, all reserves will be depleted – except the city’s endowments fund – within an eight-year period. Additionally, this prediction does not include any spending toward facilities for future capital projects.
“As you can see, we are moving in the wrong direction, even if we include a 5.6 per cent tax increase each year we are not in a financially sustainable position,” she said.
“So, obviously that’s not sustainable,” said Young. “I’m not pointing the finger at anyone, I’m just trying to understand this. My question is, what are we doing about this?”
The city’s total reserve budget is projected to be $789 million at year’s end. Typically, it withdraws $40 million per year for asset retirement obligations (power plant, gas wells) energy transition, capital projects, operational short falls and to supplement financial sustainability and community liveability.
“While this sounds like a large number, it is prudent to note that most of these funds are already committed to projects,” said Bishop.
These numbers spurred confusion as the city also earns interest of approximately $28 million from its reserve balance. Coun. Ted Clugston asked for clarification on how the positive interest amounts were calculated into the budget.
“I’m still feeling there is a gap here of a very large magnitude,” said Clugston.
Staffers were unable to provide a clear answer for Clugston and said some of the interest was used to offset operating costs while the rest was put into reserves.
“It’s helping to offset some of the expenses that we have.” explained Lola Bartha, interim managing director. “That still is not sufficient to cover our deficit as well as the other operating expenses.”
Clugston said during his previous council appointment, the city was able to do more with less money available in the reserve budget.
Bartha explained that previously the city had a larger energy dividend from natural gas and electric generation, and says the city is not receiving the same profits from the energy division.
“When you’re not putting money into the bank and you’re continually taking it out, you are going to see that draw down on reserves,” said Bartha.
Following press time, councillors also received a presentation on the 2026 Utility Distribution Systems Operating Revenue and expenditure budget changes, the 2026 Energy Utility Rates Changes and Energy Production in 2026.
Council also discussed proposed changes to the 2026 Gas Utility Bylaw and Electric Utility Bylaw.
Due to some confusion around the new starting time of 4 p.m., councillors approved a motion to begin their next public meeting, on Dec. 8, at 6:30 p.m.
The News will have more coverage on changes to these bylaws in Wednesday’s edition.
