The tax question was almost inevitable.
In a question-and-answer session following Mayor Ken Johnston's State of the City speech on Wednesday, he was asked what the city plans to do to prevent a repeat of this year's double-digit tax increase shocker, along with hefty hikes in utility bills.
"I'm just wondering what plan does the city have to ensure future increases will be more in line with inflation?" asked one of the 200 people who gathered at Westerner Park's Harvest Centre for the mayor's last State of the City address, arranged by the Red Deer and District Chamber, Red Deer Construction Association and BILD Central Alberta.
"10 and a half (per cent) is not sustainable," said Johnston. "But we do have to address our reserve situation and so on.
"We're not alone in this. You can phone up any mid-sized city, any Lethbridge, any Thunder Bay, wherever the case may be, this is a tough spot. It's a tough gig when you're a mid-sized city."
Despite this year's tax increase, the city stacks up well against other Alberta communities, he said.
Johnston said residents' expectations of what services they expect are high at a time when Westerner Park financial help, provincial cutbacks, and municipal inflation rates all affect the city's bottom line.
The mayor called the increase "the most difficult decision ever made in the city by both administration and council."
Municipal inflation rates are typically three to four per cent higher than the Consumer Price Index, which was nationally 1.8 per cent last December. Alberta's inflation rate was higher at 2.5 per cent.
In an interview following his speech, Johnston said that with double-digit tax increases that are not sustainable, the city must look at how to promote revenue-increasing growth and take a hard look at what businesses the city should be in.
"Should we be in economic development? Should we be in housing? Should we be in parking? Those are decisions we will make now in terms of how we position our budgets going forward," he said.
"It's all about picking and choosing and making sure that we have a balance of services for people."
The city is now paying the price for being "too present-focused" on taxes with too little "rainy day-thinking" in the past, he said. That led to taxpayer-pleasing zero per cent increases but contributed to today's financial challenges.
"I think future councils will be forward-thinking enough to be able to say, that yes, we can have a three and a half per cent this year but we should really think about why it should be five. That one and a half then cushions against these big price shocks."
In his speech, he emphasized that Red Deer has much going for it.
It remains one of the most affordable communities and much is being done to address housing challenges, including a Land Use Bylaw overhaul that is allowing more potential land uses and "gentle density."
Early building permit numbers are promising, $17 million in permits last month compared with $7 million. That follows 2024, which saw $131 million in building permits issued, compared with $94 million in 2023.
"These are good indicators that things are moving," he said.
Recent permits for 46 new housing units in four apartments shows that the market is responding to a city housing shortage that saw vacancy rates fall below one per cent but have since edged upward to 1.2 to 1.3 per cent.
The $1.8 million Red Deer Regional Hospital Centre expansion is already providing an economic boost.
"The hospital now is becoming a very, very significant economic driver in the city and I just can't really stress this enough," he said. "The hospital is starting to ignite some serious growth in the downtown and it's really starting to ignite Capstone."
The mayor said he has also spoken to the justice minister about the potential for a law school campus in the city's soon-to-be-opened Justice Centre to stem the legal brain drain.
"A law school campus would really help us."
