St. Albert residents have until Oct. 18 to decide who should fill the city's six available council chairs.
In this, our final instalment of a six-part Q&A series, the Gazette asked those seeking election to address the issue of residential property taxes in St. Albert. Responses have only been edited for spelling, grammar and length. The Gazette does not vouch for the accuracy of candidates' statements.
A City of Edmonton report on 2009 property taxes concluded that St. Albert residents pay significantly more municipal property tax than others in the region (44 per cent more for an average home).
Please describe your preferred approach to residential property taxes in St. Albert. Please include in your response an explanation of why you would or wouldn't support the following two approaches: 1) zero-based budgeting and 2) limiting property tax increases to a specific percentage or index.
St. Albert continues to see a rise in taxes while its spending may not reflect the community's desires. Taxpayers' dollars are not being prudently spent, as was seen with the recent purchase of a B.C. artist's sculptures. Services that once attracted people to St Albert are now being outweighed by a tax burden making the city unaffordable to current and future residents.
Council must begin to address this issue. While limiting property taxes is an attractive political proposal I cannot promise to make a specific increase ceiling. Frankly, I am not certain this promise can be kept and would result in more civic disappointment. My duty, however, would be to ensure efficient spending and increases be a last resort. I would support the principle of zero-based budgeting as it prevents wasteful spending. The principle calls for an annual review and approval of all expenditures (as opposed to requests for increased funding) impacting the efficiency sustainability of our city.
The city must find new sources of revenue. The city needs to encourage business to open up within St. Albert, which will improve our overall tax base and reduce our dependency on residential taxes.
Zero-based budgeting should be considered. Through this process, the city can decrease expenditures. I do not mean that the city will cut essential services, but rather streamline the budgeting process and eliminate any inefficient elements. With this process the city can demand more accountability from the various departments and will be able to better allocate taxpayer money.
Ideally, I would hope that we do not have to increase taxes, but if after a thorough review, it is absolutely necessary then I would not want to raise taxes more than the regional inflation rate or 1.5 per cent, whichever is lower. I do not believe that we should further burden our residents who are already struggling with one of the highest residential tax rates in Alberta.
St. Albert is a vibrant community that brings great value to the Alberta Capital region. To remain a community that is compelling, that draws new residents and attracts new business to our community to ease our current tax burden, we need to be inspirational in our vision for St. Albert, strategic in our planning and effective and efficient in our service delivery.
How is this done? First, there is no budgeting scheme that provides a windfall of funding to ease the taxes. "Zero"-based budgeting implies civic budgets must cover annual inflation within current allocations. Limiting tax increases to a specific per cent or to the consumer price index simply sets a tax target for council. While both budgeting approaches have merit, it is the consistent, focused, unflinching dedication by council to achieve the vision for St. Albert that will allow funding decisions to be made consistent with the tax goal.
There is a concern regarding our residential taxes and I know that council must work towards a better residential/commercial tax split as 88/12 is simply not acceptable in the long term. However, zero-based budgeting is unrealistic as our budget is based on the municipal price index which is the current cost of the "basket of goods" needed to run a municipality in Canada. It includes the cost of such items as diesel fuel for transit and public works, utility costs, grid increases for CUPE employees, firefighters, and non-union employees.
It is fiscally prudent for council to look at the entire operating and capital budget prior to deciding on a fixed figure for our tax rate. Council must work diligently to scrutinize department spending, and outside agency requests, then balance that with the services that our citizens have come to expect.
Property taxes are based on the mill rate that is determined by the operating budget. The operating budget is an upward process that calls for the department managers and the city manager to estimate what they need. They always need more.
The process needs to be reversed. Council needs to tell the city manager how much he will get to run the city. The city manager and department managers then determine how the budget will be spent. There cannot be any cuts to basic services.
Zero-based budgeting is not functional. It is time-consuming and inefficient. Councillors do not have the expertise to review expenditures to decide what can be reduced or eliminated. It is the responsibility of the city manager to spend only what council approves.
Limiting property tax increases to a specific percentage or index implies that nothing can be done to reduce the operating budget. It can and must be reduced in order to reduce taxes.
Increasing our non-residential base is the only way St. Albert can become more competitive with Edmonton's residential tax rates. The present council has worked collaboratively with the 17 landowners in the annexed lands as well as diligently moving forward Landrex's Erin Ridge North development, the Genstar Northwest Urban Village and Triple Five's projects.
To be successful in moving forward in the annexed area, collaborative efforts must continue between council, administration, developers and landowners. Base partnerships and synergies have already been started by the present council and we can move forward and build the main framework for future non-residential growth.
The introduction of zero-based budgeting could occur in the preparation of the 2012 budget although this does not guarantee cuts in taxes. The first major challenge the new council will have will be to scrutinize the 2011 budget, where council's budgeting experience will be essential.
The present 89/11 per cent ratio between residential and non-residential assessments is an unhealthy situation to build a sustainable community.
My approach would be to grow a balanced residential, commercial and industrial community with an equitable sharing of taxes. This involves economic development and business growth through available land, marketing programs, business-friendly policies, competitive tax base and reduced administrative red tape.
We need a fiscally responsible attitude providing clear budget guidelines, scrutinizing expenses and business cases so we manage to budget.
Consideration of zero-based budgeting avoids taking the previous year's revenues and costs then adding a percentage to present a current year's budget. A fiscally responsible budget can be developed once a business plan has been identified.
Applying a specific percentage or index to current expenses assumes these expenses are affordable and ignores the opportunity to challenge the process to identify cost reductions.
I support zero-based budgeting and a cap on property tax increases of 1.5 per cent. Property taxes have increased faster than the incomes of residents and this is not sustainable, nor is it desirable. Keeping tax increases at a modest level for the next three years is something we must strive for to maintain our competitive advantage in the Capital region and to deliver value for money to residents.
When you examine the budgets you see that some departments have grown dramatically and some have barely kept pace with inflation. The question then becomes "what services are offered relative to the cost?" Zero-based budgeting answers this question as departments no longer ask for annual increases based on last year's figures, but rather on what services are delivered. If we are to provide value for money we must have a budget process that encourages departments to find internal efficiencies.
My top platform issue is to limit property tax increases to the cost of living for the next three years.
This is coupled with measurable, time-limited economic development plans with clear targets and outcomes to increase the sources of non-residential taxes.
St. Albert's regressive tax system, the highest in Alberta, must be controlled without negatively impacting services. This is limiting our ability to move forward and to attract more people, investments and businesses to our city. This is hurting many seniors and our most precious resources: young people and young families.
If we don't make St. Albert affordable for them, school enrolments and businesses will decline and property taxes will continue to increase well above the cost of living.
I'm probably the only candidate that has first-hand experience working with zero-based budgeting in the government and in the private sector. The result is considerable financial savings and improved efficiencies and productivities.
I am not in favour of zero-based budgeting or limiting tax increases to unrealistic percentages. It's the duty of the elected officials to act on behalf of the citizens of St. Albert. During my three years on council, I never once steered away from the diligence of questioning the need to spend money for new business cases. Every three years the electorate decides who they think will best represent them. That of course includes the budgeting process.
Yes, we pay more for taxes in St. Albert compared to Edmonton and in my opinion we receive the value for that. When my family moved here in 1972 we knew the taxes were higher but we still chose this as our home for reasons like: schools, parks, trails, pride of ownership, policing, air quality, friendly people ... and many, many more reasons. Note: average tax increases in past three years, Edmonton = 6.6 per cent; St Albert = 4.30 per cent.
St. Albert has a revenue problem. Unfortunately, we cannot seem to find another reliable source of revenue other than repeatedly increasing property taxes.
The concept of "zero-based budgeting" is a "clean-slate" approach where the budget line items are built from the ground up. In theory it sounds desirable, in practice it has proven to be ineffective for large budgets. It is not realistic to expect that spending decisions are made in isolation and without the benefit of past experiences.
I support a concept known as "zero-base review." Although similar, it requires management to distinguish "core expenses" and "discretionary expenses" and then, defend the requested dollars. A zero-based review allows council to receive a timely prepared budget with the benefit of knowing what's been spent in the past, but those discretionary costs are highlighted and not buried in with core expenses.
I would propose that our tax increases are benchmarked against a five-year average of the regional inflation rate as measured by Statistics Canada.
Council has a responsibility to set a tax rate that is as low as possible while maintaining quality services to city residents and ensuring that costs are not downloaded to future generations. Some cost increases are outside of the city's control (e.g., the cost of gas and utilities). Therefore, council continually seeks ways to decrease costs (e.g., reducing infrastructure costs).
Each year since 2001, council and administration have worked to improve the budget process. Significant improvements have been made and council will continue to improve the current process utilized. I'm always open to looking at alternate processes that lead to improvement.
I have committed to bringing a motion forward to cap tax increases at 1.5 per cent for 2011-12. We must set a target so that council can strive to achieve a tax rate as low as possible. A cap on taxes would have to be evaluated throughout the budget year to determine the effects.
James Van Damme
I would support moving toward zero-based budgeting. This would provide city council an avenue for ensuring city administration explained the requirements for each item in the city's budget, turning away from the traditional budgeting system where the city takes last year's budget from each department and adds a few base points while providing explanation only on the increased amount. "Spend it or lose it" is the budget method that must be avoided.
I will work toward providing new revenue streams for St. Albert to stabilize and lower property taxes for the long term. We had a surplus last year and still raised property taxes when we could have given the residents a tax break. St. Albert would not be sustainable for the long-term at the tax increases we have experienced over the last seven years. At the rate we're going we could easily be one of those "coal mining" type places — had potential but didn't get with the times for long-term sustainability.