There’s good news and bad news for St. Albertans in preliminary budget reports presented to council this week.
The good news is that the monthly utility rate is expected to decrease by about 2.2 per cent in 2017. The bad news is ratepayers may be shelling out an additional 3.1 per cent to support the city’s operating budget.
Council accepted both a preliminary budget position overview and a preliminary utility position overview for information at the Sept. 12 committee of the whole meeting.
“This is essentially a high level overview of how things are shaping up and coming to fruition,” interim city manager Chris Jardine said. “There’s good news and, I wouldn’t call it bad news, but maybe a little bit of work to do.”
The extent of the work to be done won’t be clear until administration presents the 2017-2019 corporate business plan and budget at the Oct. 24 meeting.
The city will seek public feedback throughout the budgeting process in November, but the extent of the good or bad news for residents won’t be known until that budget is approved later in the year.
In terms of the 2017 operating budget, the city will have to bring in $95.9 million in taxes to maintain current service levels.
Revenue has increased by $1.1 million due in part to increased photo enforcement fines, increase in the provincial Municipal Sustainability Initiative (MSI) operating grant not budgeted last year, more money from inspection permits and increased ambulance revenue.
Expenses, however, will increase $3.9 million, due in large part to $2.4 million in salary adjustments, but also factoring in increased utility costs, interest, and necessary base business cases or investments.
Administration is proposing the shortfall of $2.8 million be made up through a property tax increase. Finance director Diane McMordie explained to council that each percentage point of increase would bring in roughly $930,000.
The amount of money the city brings in based on property value assessments is forecast to be about $2.8 million, but the taxation guiding principles policy guides how that money is to be spent. Thirty per cent, or $838,000, has been applied to projected revenue while the remainder, about $2 million, is set aside to fund 24 new growth initiatives and business cases. Details on those business cases will be included in the proposed budget presented to council Oct. 24.
Mayor Nolan Crouse expressed some concern over the province’s intentions with the MSI grant, which had initially been approved for a 10-year period ending last year. The proposed 2017 budget includes some of the grant money.
“There’s no indication it’s going to stop. For budget purposes we’re going under the assumption that it’s still going on,” she said. “They’ve now taken that statement off their website, saying the grant is going away.”
As for the impact of the provincial carbon tax on the budget, McMordie said it’s not yet clear what impact the tax will have on electricity prices, but in terms of natural gas it will be included in the rate – good news for the city, which has just negotiated a four-year fixed rate.
Several councillors raised concerns about the anticipated deficit in the capital budget and sought clarification on what impact that might have this year.
Jardine acknowledged there appears to be a deficit in the 10-year plan, and likely for many years to come, but said details of those issues would be presented to council at the Sept. 26 meeting.
He said there would be some savings realized because projects have been coming in under budget, due in part to the current economic slowdown, but the savings might not be too significant.
“There’s some short-term savings, definitely, but I wouldn’t say that’s a solution to our 10-year challenge.” Jardine said.
Coun. Sheena Hughes noted the 3.1 per cent increase might be misleading, as that increase could become closer to 4.5 per cent depending how much borrowing needs to be done on the capital side.
With respect to the utility rate decrease, the 2.2 per cent change will reduce the average household monthly bill to $144.64, which came about mainly because of a decrease in future capital project funding needs and a projected increase in customer growth.
“I really appreciate the fact our engineers have gone through this, found some savings, been able to reduce the capital plan by $1 million dollars,” Coun. Cam MacKay said.
