It might not be a large sum, but news that the City of St. Albert once again is forecasting a year-end surplus is enough to spark a twinge of hope in taxpayers. Just as predictable, city administration is not interested in hearing about excess tax dollars returning to their rightful place, the pockets of St. Albert property owners. City council needs to give the idea serious thought and settle this annual fiscal donnybrook once and for all.
Council learned this week the city is on pace for a $575,000 year-end surplus, a relatively modest sum compared to past years and in particular compared to the overall $116-million budget, representing a variance of about 0.6 per cent. Council has another month to think about what to do with the sum, by which time administration will come out with a detailed list of recommendations. One doesn’t need a crystal ball to know topping up rainy day reserves will be near the top of that staff-generated list, or that a series of projects in need of cash will suddenly emerge from the fold. Finding new ways to spend your property tax dollars before closing off the year-end books is perhaps one of the most creative annual exercises a government undertakes. Past surpluses, some three or five times larger than this year, have been consumed by filtering them to various reserve accounts, money-losing facilities or programs, or new staffing positions.
Tax savings rarely makes it on the list, and almost never as a recommendation from administration. The argument has traditionally been against one-time tax relief, which could create fluctuations in year-over-year increases, or so the theory goes. For instance, using the surplus to cut the 2011 property tax hike by about one percentage point might cushion wallets this spring but taxpayers would feel even more pain the following year since annual budgets are based on the previous year’s tax rate. That might be a legitimate argument, but also overlooks the basic fact that a surplus, whatever the sum or variance, is a case of overtaxation. It’s that simple.
When a government raises more money from taxpayers than it needs, it should be automatic that tax relief is on the table at year end. That’s not to say tax relief will be necessarily the best course of action year after year — council has to look at the big fiscal picture — but it should never rule it out, as administration recommended with its proposed change to budget policy.
There’s no question handing back cash can be a short-sighted approach to budgeting, as all Alberta saw with the Ralphbucks last decade. But just as misguided is treating surplus tax dollars and reserves as a slush fund for programs that for one reason or another did not make it into the annual budget. When surpluses are practically guaranteed, as has been the case at city hall, it’s hard not to conclude the excess is viewed as found money, the year-end surplus transfer constituting a mini-budget sequel.
That approach is understandable in a city like St. Albert, where sensitivity to property taxation is the number-one concern when putting together a budget. Surpluses allow the city to pad reserves beyond what they’d be able to do through the budget process, without an additional impact to the tax rate. Finding additional dollars without raising taxes has become an all consuming task either through pushing traffic and photo radar fines, user fees, grant applications or double-digit utility hikes, the latter of which has become the norm of late. For the average taxpayer, it’s much harder to tell whether the same effort goes into finding savings. Taking tax relief off the table would be a telling indictment indeed.
