The City of Red Deer is already facing a $1.3 million revenue shortfall, six months before the next budget deliberations begin.
The problem is fewer fewer fees for recreation, development permits and transit rides are being collected in this tight economy. While 2018 is expected to be a better year, council has already committed to raising next year’s taxes by only two percent, said the City of Red Deer’s Chief Financial Officer Dean Krejci.
Even when the economy improves as the Conference Board of Canada is projecting (with 2.2 per cent local GDP growth in 2018) there will be a one- to two-year lag before the city begins to feel the positive impact, he told council at a mid-year budget meeting on Tuesday.
“It’s going to be a challenge for us in 2018, given that our tax increase is set at 2 per cent,” said Krejci.
Of this amount, he said one per cent is already slated to be put in a community amenities fund, to replace money that’s been withdrawn from the reserve for other projects in the past. This will leave only one per cent of next year’s tax increase to put towards new operating expenses.
With a projected revenue shortfall of $1.3 million, the options are finding other revenue sources, or reducing expenses through service or staff reductions. “We are going to be looking at a wide variety of cost savings,” said Krejci.
As for capital expenditures, there’s a $11.7 million budgetary “over-commitment” on paper. But Krejci noted that this would only occur if every capital reserve project was completed by Dec. 31. “There’s not a good chance of that ever happening,” he said, since the city controls the pace of these developments.
A carbon tax is among the new costs the city and other Alberta municipalities are bearing. The City of Red Deer also must pay more in policing salaries after a higher wage settlement was obtained. And extreme weather is a costly factor.
The city spent a total of $2.2 million cleaning up after wind storms blew over trees and power lines in June. City Manager Craig Curtis believes climate change will be an ongoing concern, impacting the city physically as well as financially in future.