The City of St. Albert needs an extra year to find areas for service level reductions and cuts, the city's chief administrative officer says.
The city is currently looking at ways to bring down a projected 2023 tax increase of 8.2 per cent, meaning the city will have to find $6.3 million in savings to bring down the increase to three per cent, or on the higher end, $4 million for a tax increase of five per cent.
Diane McMordie, the city’s director of finance, said in an email the city’s 2023 operating budget is still being finalized, and the detailed operating budget will be presented as part of the final proposed budget in October.
To calculate the 2023 tax levy predictions, $127 million was used as a basis, which represents an 8.2-per-cent increase over expenses in 2022. The $127-million figure was calculated by taking the total expense budget required to provide council-approved services and service levels, and subtracting anticipated non-tax revenues (for example, recreation fees, fines, etc.). McMordie noted the tax levy calculations differ from the operating budget.
Council discussed ways to decrease the tax levy during an Aug. 16 meeting, where options offered by administration included using money from the city’s stabilization reserve; increasing the electrical franchise fee; reducing or eliminating community grants; and reducing or eliminating the 2023 repair, maintain, and replace (RMR) levy, which automatically adds an annual 1.5-per-cent tax increase.
Not currently on the table for 2023 are service reductions and staffing cuts.
Bill Fletcher, St. Albert’s chief administrative officer (CAO), said in an interview the major reason reductions aren’t on the table for 2023 is the complexity of the work needed to achieve them.
“It’s easy to alter service levels, but it’s very difficult to fundamentally change or cancel [them],” Fletcher said.
He gave the example of an altered service level resulting from a 2022 budget motion to change the frequency of grass cutting from every 10 business days to every 12 for $39,000 in savings.
“The amount of angst that caused amongst a good portion of the community makes you question whether it was worth the money that was ultimately saved,” Fletcher said.
With the level of cuts the city is facing to make a dent in the tax increase needing to be in the millions of dollars, Fletcher said there are even larger decisions to make, with even more substantial ramifications.
This scale of service level changes would be “infinitely complex,” and take money and time to determine the impacts, Fletcher said.
In an email, city spokesperson Cory Sinclair said once council understands what services the city needs to look at, it will also assess whether an in-house review can be completed to determine a recommendation for council, or if a consultant will be needed.
Asked why the city has not turned to staffing cuts as other organizations have had to amid financial difficulty, Fletcher said the city’s staff has not increased in proportion to St. Albert's growth over the past five to eight years, which he said could be argued is "a de facto cut over time.”
“We can always find better ways to do business,” Fletcher said. “Be we are lean, and … the product that’s produced by city staff outweighs, quite frankly, the staffing levels that we currently sit at.”
Further, cutting staff ultimately means cutting service levels. Finding areas for service level reductions through additional discussion with council and evaluation will be the core means for the city to ultimately find ways to save costs, Fletcher said, a process that will lead to staffing considerations.
McMordie noted for the last couple of years, service level reductions offered by administration often were not accepted by council at budget time.
“What we learned from that is we need to engage council early and often,” McMordie said. “At the end of the day, they’re the ones who own the service levels, and they’re the ones who have to ultimately deal with the shortfall from the residents.
“That’s why we’re taking a much more holistic and inclusive approach to address this going forward.”
Servus Place
During the Aug. 16 council committee meeting, when some council members expressed an aversion to reducing smaller community grants, Mayor Cathy Heron said council has “got to find some money” to offset the tax increase.
Coun. Sheena Hughes said in response the questions on the table were “nothing about internal” city operations.
“That’s why we’re talking about peanuts here,” Hughes said. “The bulk of the money is not from here, it’s internal.”
Hughes raised questions around a $2-million operating deficit at Servus Credit Union Place.
“A $2-million deficit is to me an unacceptable number,” Hughes said, suggesting the budget for Servus Place should be reduced with the instruction to operate differently.
In an email, Sinclair said the net financial impact of Servus Place is $2.5-million, factoring in $6.7-million in revenue and $9.2-million in expenses.
Diane Enger, the city’s recreation facility director, told council considerations around the budget of Servus Place are complicated, as a portion of the cost to operate Servus Place is covered by revenue.
“Every time you cut something in that building, it could impact the revenue, which could then impact the cost recovery,” Enger said. “It’s a delicate balance that needs to be looked at as a whole.”
The cost recovery for Servus Place in 2022 is budgeted at 72 per cent, a decrease of 13 per cent from the cost recovery for 2019 of 85 per cent, Sinclair said in the email.
"The cost-recovery rate is in alignment with the typical costs for a multi-component recreation centre and aligns with regional counterparts," Sinclair said in the email. "Municipalities invest in recreation facilities to contribute to the social and physical health of residents."
Sinclair said it is also important to consider the impact of the pandemic and resulting closures on recreational facilities.
"We are gradually recovering from the impacts of the pandemic and are seeing growth in most areas; however, membership numbers are a bit slower to recover to pre-pandemic levels," Sinclair said. "Similar challenges are being faced by recreational facilities in the region as well.
"Administration is currently reviewing fees and embarking on a membership campaign in alignment with facility recovery plans."
McMordie told council it’s not realistic to figure out the facility’s deficit for the 2023 budget.
“Maybe that’s something that gets put on the list potentially for discussion,” McMordie said.
The specifics of how the city’s approach to service reductions will play out in the future are still being formulated by administration, McMordie told The Gazette.
“We need to understand from council what level and what type of public engagement we want to do,” McMordie said. “Is this something council wants to wrestle with on their own, or how do we engage the public in terms of what services and service levels we look at?”
Ultimately, she said, the city doesn’t have the capacity to look at everything, so each area they examine will need to see some degree of support from council or the community before the city invests its resources.
Fletcher said while service reductions are a key piece of how the city will reduce future tax increases in the coming years, increased economic development and business investment in St. Albert are also key methods the city is pursuing long-term.
“That is a huge focus area for St. Albert — growing the non-residential tax base, and looking at alternate revenue sources that will mitigate in the long-term future, without having to make the really difficult choices that are sitting in front of us right now,” Fletcher said.
