Red Deer city council is facing another challenging budget, having to find or cut about $20 million to balance 2025-26 finances.
"We are preparing for one of the most difficult budgets we've seen in some time," said Mayor Ken Johnston during Tuesday's council meeting. "Never has it been more difficult to be running a city..."
Between having to contend with lower provincial and federal grants, higher than expected inflation and worker contracts, and a relatively slow city population growth rate, the City of Red Deer finds itself in the position of spending more than it brings in by about $20 million.
While some of this operating deficit could be alleviated through raising property taxes and utility fees, "we need to consider additional ways to reduce expenses to balance the budget," said the city's growth and finance general manager Mike Olesen.
He is preparing to bring a report to council on Sept. 3 that outlines and rates city services. Rather than arbitrarily making cuts, council wanted a review undertaken to prioritize all of the programs the city offers — from transit to recreation sports to arts and culture.
Over most of July, councillors were surveyed on 275 service levels to explore the appetite for making future changes to reduce expenses.
Members of the public have also been able to weigh in, with the data collected so far compiled in the What We Heard report. There will be other opportunities for Red Deerians to voice opinions this fall.
Although city administration is working on a long-term business and financial systems plan that will identify what's needed for a more secure financial future for the city, Olesen told council he's concerned about the present-day state of the city's reserves, or savings.
If council continues drawing from reserves to cover annual deficits, soon there won't be enough money available to pay for unexpected or urgent needs, he added. "I am not comfortable with the reserve position ... we are spending more than we are bringing in. Our reserve position is behind our asset needs. It is a going concern."
Several councillors asked whether city managers are making the best use of their department budgets.
Olesen responded it's their mission to ensure money is spent as efficiently as possible. Doing more with less — or not doing at all if there is no more money left, has become a mantra, he added.
When returning to council next month with a full review and analysis of the service levels that were identified, Olesen and other members of the city's financial team will provide direction on what could be included in the budget recommendations in November. But no decisions on service level changes will be made until the budget process begins.
Olesen believes council should question where the community will get a particular service if the city no longer offers it, or severely reduces hours.
Coun. Lawrence Lee stressed council will make responsible decisions — it won't be a matter of cutting off transit service at 5 p.m. or skimping on Emergency Services, "that would be untenable."
Coun. Bruce Buruma believes the process will be challenging as citizens have high expectations of services, and yet council has a duty to balance the budget.
Many municipalities are facing extremely difficult budgetary decisions, said the mayor. Johnston added they have only one main revenue-generating lever — which is "regressive" property taxation — while higher levels of government reduce grants and download more responsibilities on cities, town and counties.
Running local government "is a tough gig," he added.
The capital and utility budget will be debated by council on Oct. 1. The operating budget will be discussed Nov. 18-22. For more information on the city's finances, please visit reddeer.ca/budget2025.
