Red Deer is a pretty good place to do business — but it could be better.
This is Richard Truscott’s assessment of the city, and one that he shared with a local business networking group Thursday evening.
Truscott, who is director of provincial affairs for Alberta with the Canadian Federation of Independent Business, voiced concerns about municipal spending and businesses taxes during a presentation to the Red Deer Leads Executive Association.
He pointed to a growing “fiscal sustainability gap” in the city — the result of Red Deer’s operational spending growing faster than the community’s population and the inflation rate.
And Tuscott described how a disproportionate share of this spending is being supported by local businesses. Residential property assessed at $100,000 generated $510 in municipal taxes in 2009, he said, while business property valued at the same amount resulted in a $1,277 tax bill.
This “property tax gap,” he said, reflects a “cross-subsidization” of Red Deer residents by businesses.
“If businesses were using two or three or four times the amount of services, that might be justified — but that’s not the case.”
Truscott noted that Red Deer’s property tax gap of 2.4 is mild compared to Calgary’s, which stood at 4.57 for 2009.
At the other end of the spectrum was Brooks, at 1.6.
In fact, he said, Alberta businesses paid on average 1.89 times more than residents in the same community.
The disparity is higher in municipalities with at least 5,000 people, where the average property tax gap 2.36.
The risk of having a big property tax gap is that local businesses might be tempted to relocate to a place with a more favourable system.
Truscott pointed to Saskatoon as a positive example of reform. That city recently completed a 10-year program to reduce its property tax gap from 2.36 to 1.75, with a goal of becoming more business friendly.
On the plus side, a recent research report by the CFIB placed Red Deer among the top 10 entrepreneurial cities in Canada. The rankings were based on three criteria: presence, or the number of business start-ups; perspective, or the outlook of small business owners; and policy, or the tax and regulatory climate.
On this basis, Red Deer placed seventh, with four other Alberta cities in the top 10. But its overall score of 60 out of 100 was well below the 73.1 score earned by Grande Prairie, the number 1 city.
The CFIB is a non-partisan advocacy organization with about 108,000 independent business members across Canada. These include 10,000 in Alberta and 400 in Red Deer.
hrichards@www.reddeeradvocate.com