The City of St. Albert may not be able to afford many new capital projects in the coming six years because it has a huge shortfall in its capital budget.
City staff are recommending delaying or unfunding 25 of 42 capital projects for 2018 and deferring that money to the 2019 capital budget. Otherwise, the city won’t be able to cover the repair, maintenance and replacement section of its 2019 municipal capital budget or fund any new projects.
With Monday’s release of St. Albert’s proposed 2018-20 business plan and 2018 budget came a warning from city manager Kevin Scoble that the city still faces a wide gap in funding for its 10-year municipal capital plan, beginning next year.
The plan contains $621 million worth of projects, with $345 million of that earmarked for new projects and the rest slated for repair, maintenance and replacement – known as RMR – of existing projects.
Scoble’s budget presentation included a graph that shows projected funding will fall drastically short of required funding between 2019 and 2024.
“The city currently faces a significant funding shortfall over the next 10 years, which results in limited ability to fund future growth projects,” Scoble said.
The graph he presented shows 2019’s capital requirement for RMR and growth is expected to top $100 million, while available funding comes in well below $40 million.
City staff whittled down the proposed municipal capital plan for 2018 from $44.4 million to $29 million by recommending that 25 of the plan’s 42 growth projects be unfunded or postponed. Scoble recommended the $14.6 million removed from the plan be held for 2019 to help offset the looming deficit.
“(That) ensures the RMR deficit shown on the graph here is rectified and that there’s a reasonable amount of growth funding available for high-priority projects in 2019,” he said.
Some of the growth projects the city is recommending be postponed include $3 million for the third phase of Founders Walk, $250,000 for urban forest canopy enhancement and management, and funding for an aquatics expansion, fitness expansion and sixth ice surface.
Scoble added city staff are in the process of coming up with strategies to address the projected shortfalls and will present those to council at some point in 2018.
The 2018 budget includes a projected municipal tax increase of 2.9 per cent in order to meet an operating tax levy of $103 million, and a utility rate increase of 2.1 per cent.
Scoble said the tax increase would result in an average property tax increase of $99 for residents.
The municipal tax increase is 0.3 per cent higher than the municipal price index, which the city is using this year for the first time. Scoble told the Gazette that the municipal price index helps the city understand projected pressures and forecasts.
The municipal price index looks at cost of goods and services the city typically uses, including sand, construction and salaries and benefits.
“Over time, on an average basis, St. Albert tax impacts should be similar to MPI trends for inflationary items,” he said, noting additional tax impacts come from new services directed by council.
This year, the proposed tax increase includes $400,000 in projects deemed necessary to maintain current service levels. Some of those projects include cyber security and an emergency management exercise.
The city projects $2.6 million in new assessment growth for 2018, which is used to offset the cost of growth projects. Just over $1.6 million of that will go toward 20 new projects and staff, which include 12.9 new full-time-equivalent positions.
Eight of the new staff positions would be in Community and Protective Services, including four 911 operators and a transit technician.
On the capital side, the municipal budget includes 32 RMR projects worth $22.1 million and 17 growth projects worth $6.9 million.
Most of the RMR budget relates to the engineering department, which would receive $15.5 million for projects including road rehabilitation, the replacement of barrier walls along St. Albert Trail and traffic signal maintenance.
There is just over $2 million budgeted over 2018 and 2019 for reconstruction of Fire Station #1.
For the utilities operating budget, the proposed rate increase corresponds with inflationary increases as well as $200,000 for projects and staff to maintain services. That includes a utilities infrastructure planning engineer.
The utility capital budget includes 11 RMR projects for $11.8 million and three growth projects worth $200,000. Growth projects include signage for the stormwater facility and two trucks.
The 2.1 per cent increase would add an average $3.04 to monthly utility bills.
For RMR, recommended utility capital funding includes $2 million for a sedimentation and erosion control plan, funding for stormwater infrastructure and stormwater management and $2.7 million for increasing capacity of the wastewater collection system.
Councillors did not debate the budget on Monday but will begin deliberations at a special council meeting at 3 p.m. on Thursday.
The city will host a budget open house for residents Wednesday at 6:30 p.m. at Red Willow Place.