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Utility fiscal policy decision delayed

Numbers in staff report questioned, council delays to get revised version

By: Victoria Paterson

  |  Posted: Wednesday, Apr 16, 2014 06:00 am

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A decision on the direction of the city’s utility fiscal policy has been delayed again.

After the last council opted in early 2013 to leave the decision to the newly elected council, St. Albert’s elected officials have been gearing up to address the issue of a utility fiscal policy.

Councillors were presented with a number of different options during Monday night’s standing committee on finance meeting, but raised concerns that the numbers presented in the report weren’t quite accurate.

“There have been a serious number of questions asked about the numbers contained in this report,” said city manager Patrick Draper after a recess was taken.

Draper asked for the discussion to go to next month’s standing committee on finance meeting so that the numbers can be adjusted.

Draper also apologized to Coun. Sheena Hughes for getting “testy” during an earlier discussion.

While the committee, which consists of all seven members of council, eventually turned in a unanimous vote to delay the fiscal policy discussion, not everyone was in favour of it at first.

“We’ve been working on this for a year. Over a year,” said Coun. Cathy Heron. She said the utility fiscal policy is about philosophy, not numbers.

“I think what we need to do today is have the philosophical discussion,” Heron said.

Draper said his concern was that the numbers in the report might not accurately reflect the policy options, and other councillors said they wanted to see the accurate versions to inform their decision.

“In this case the stakes are very high,” said Coun. Cam MacKay, who moved the utility fiscal policy discussion be delayed until May.

He said the numbers will show the potential impact of the various policy possibilities.

The mayor asked staff when they need to know the utility rate number for the 2015 budget. The response was later this year, so council opted for the delay.

Council did get a presentation on the various options they could employ in creating a utility fiscal policy.

Currently there is no formal policy guiding the city, though staff have a number of standard practices they use. Those include funding utility capital projects on a cash basis and using a portion of the Municipal Sustainability Initiative funds from the province for capital projects.

Scenarios presented to council during Monday’s meeting included using debt to finance capital projects exceeding $3 million or $5 million, depending on council’s direction.

The administrative report also looked at ceasing use of the MSI funds immediately or phasing them out over three years.

The report also explored the idea of the city getting a dividend from its utility business.

Staff’s recommendations were to use debt for utility capital projects exceeding $5 million and with an asset life expectancy of more than 25 years, to phase out MSI grant use in utility projects over three years and to explore the option of a one per cent dividend payment.

A one per cent dividend payment would be worth about $320,000 in revenue to the city, the report said.

The portion of the MSI funds currently used for utilities would go to municipal capital projects, the report suggested.

If all of the suggested measures were taken, the report estimated the net average increase to utility rates over 10 years would be 7.6 per cent. However, it is unknown how this estimate will be impacted by the revisions that will be presented to the committee in May.


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