Rising employee turnover will put financial strains on the city in the year ahead as Alberta’s growing economy and low unemployment rate make finding skilled workers increasingly difficult.

Sitting as the standing committee on finance, St. Albert city council listened Monday to an economic update and forecast ahead of getting its first look at the proposed tax increase for the 2013 budget.

As noted in the second quarterly report presented to council Sept. 4, the city’s employee attrition rate is starting to grow. It sits now at roughly 7.6 per cent and is expected to hit 15 per cent by the end of 2012, said Jennifer Jennax, general manager of corporate strategic services.

“The city may face great challenges in increased costs in training and retention rates,” Jennax said. “Wages, salary and benefits are an important part of any municipality’s budget.”

An expected growth in housing starts, which would impact the city’s delivery of services, could add to increased budget pressures, as could growth in the Canadian Price Index (CPI) and Municipal Price Index (MPI). The MPI alone, defined as the city’s “basket of goods” is expected to rise 3.1 per cent for the next three years.

“The MPI is a good indicator of the impact of inflation on the city’s budget,” Jennax said. “This increase means cost and wage pressures on the city’s budget.”

But the biggest pressure of all could come from the provincial government, with its budget tied so strongly to the price of oil. While Jennax said the price of crude is expected to hover around $90 a barrel, the provincial government based its 2012 budget on an oil price of approximately $99 per barrel, which hasn’t occurred. In late August, the province announced a revised fiscal update that could see a deficit as high as $3 billion for the year.

As municipalities depend heavily on provincial grant funding, any moves to curtail spending at the provincial level could trickle down to municipalities.

“That may impact some of our grants,” Jennax said. “Administration will continue to monitor developments in the Canadian economy.”

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