Red Deer County council was divided on Tuesday over a proposal to extend a $55 million line of credit.
Assistant county manager Dave Dittrick said the credit line is used to cover temporary cash flow shortages, mainly due to the lag in receiving tax revenues that are not due until June 30.
By then, the county has been running and spending money for six months to cover operating expenses and pay for capital projects, such as road paving. Many capital projects are partly funded through provincial grants that often arrive well after projects underway, Dittrick told council on Tuesday.
The credit line was also used to help cover big-ticket items, such as a $20 million investment in broadband and $20 million spent on land development to set the stage for future growth.
As well, the county is required to pass on the province's school requisitions before all of that money has been collected.
To cover shortfalls in the short term and provide time to undertake a long-term debt strategy county administration recommended an existing $55 million line of credit – which was boosted last year by $10 million – be extended for three more years.
However, a number of council members were reluctant to make a three-year line of credit commitment.
Coun. Christine Moore pointed out a new council will be elected in October.
"I do not believe we should be saddling the new incoming council in October with a decision like this," said Moore. "The world is, let's say, in a turbulent place right now."
Coun. Dana Depalme also supported a one-year extension.
Coun. Brent Ramsay proposed a compromise that would see the line of credit extended two years.
"I just think that giving that extra year, based on projections, is not needed."
Mayor Jim Wood supported a three-year extension, adding that nothing was stopping a future council from voting to change the line of credit bylaw if it wanted.
The motion to approve a bylaw extending the line of credit required three readings. Depalme and Moore voted against the first two readings and Coun. Lonny Kennett joined them in voting in opposition on the third reading, which failed on a 4-3 vote.
To approve all three readings in one sitting, third reading had to be unanimous. The bylaw will return to council on April 29.
