The grim reality of slower economic growth and less revenue is pushing the City of Red Deer to hold the line on capital projects.
During a news conference at City Hall on Thursday, municipal officials said they’ve not only had to get tough on next year’s capital budget, but on the next nine years of the city’s capital plan.
“It’s no longer business as usual,” said city manager Craig Curtis. “A significant number of projects have to be deferred.”
Curtis said 66 projects have been deferred within the 2010-2019 capital plan or have been pushed out to the year 2020.
Among those that will be pushed back beyond 2019 are a concert hall and performing arts centre, and a 50-metre competitive swimming pool — two projects highly sought after in the community.
The first phase of the civic centre expansion project, which would see new office space built once the current RCMP building is torn down, has been delayed to around 2015.
A new arena at the G.H. Dawe Centre has been postponed to around 2017.
The most significant project in 2010 will be the north highway connector, a major road that will span from the Gaetz Avenue/Hwy 11A intersection to 30th Avenue. The city has budgeted $54.6 million to do some of the servicing and right-of-ways.
The total capital budget is set at $108 million and will be reviewed by city council on Monday.
The capital plan for the next 10 years totals almost $1.244 billion based on current projections. During this time, the city is undergoing a simultaneous expansion of the water and wastewater treatment plants to better serve regional needs.
“It is the biggest impact on our capital plan . . . and probably the most important,” Curtis said.
Mayor Morris Flewwelling said this is the toughest capital budget over the last five to six years.
“We’ve been moving along pretty briskly over the last few years in terms of capital development and we’ve been doing some really good catch-up,” Flewwelling said. “But with the economic downturn, we’ve all of a sudden had to hit the brakes.”
Delaying a concert hall and an Olympic-sized swimming pool would be disappointing for supporters of those projects, Flewwelling said.
“We could say we’ll start a 50-metre pool and we’ll put four points of taxation in for that,” he said. “I just don’t think the public would buy that.”
The city will be flexible at bringing projects back in sooner, but it will depend on the economy and increased revenues, Flewwelling said.
The mayor said he hopes taxpayers won’t be dealing with a high property tax increase.
Any tax increase will not be known until the operating budget is finalized in January.
Lorraine Poth, director of corporate services, said the global economy has been “extremely volatile” and that’s had a huge impact on the city financially, both directly and indirectly.
Poth said it’s premature to say if programs and services will be cut under the operational budget, but added that’s “the furthest thing that we want to encounter.”
The city is dealing with a 30 per cent decline in new construction starts, a significant reduction in provincial government funding, extremely low interest rates from investments and lower revenues from land sales.
“Every year there’s been significant growth in new development, assessment and revenue,” Curtis added. “For the next year, we anticipate that will be $1.5 million less.” Curtis said the city is being conservative in how much money it will receive from the Municipal Sustainability Initiative funding.
“It was cut by $4 million to $5 million in 2009 and we had to adapt to that,” he said. “So we’re not making that mistake again.”
Major expenses are being incurred by city utilities, which is significantly increasing the city’s debt.
Of the $108 million, a balance of $57.1 million will need to be financed through debt.
Financial Services manager Dean Krejci said the city has had a debt repayment program in place for a few years.
“It’s a nice smooth progression for the taxpayers instead of them being hit with really significant step-up tax increases.”