The days of near-zero per cent tax increases in central Alberta communities appear to be over.
Blackfalds was the most recent municipality to pass its operating and capital budgets, which will be paid for partly through a 4.76 per cent municipal tax increase. The rate for school taxes, which are collected on behalf of the province, won’t be known until the spring.
It is a significant change from previous years when local residents saw no tax increase in 2020 or 2022 and only a minimal 0.6 per cent tax increase in 2021. This year’s tax increase amounts to another $138 on the tax bill of someone owning a typical $350,000 house.
Many communities tried to keep tax rate increases as low as possible in the last two years in recognition of the economic hardship many residents and businesses experienced during the pandemic.
But the changing economic climate, which has seen inflation and interest rates soar, has municipalities looking for more revenue to cover rising costs.
“The current economic outlook has the Consumer Price Index at a rate of 10 per cent. These inflationary increases are having a major impact on municipal operations,” said Blackfalds corporate services director Justin de Bresser in a report to Blackfalds council on the $31.3 million operating budget.
“With the current economic outlook and higher costs to provide the same level of service, the budget is not sustainable without an increase.”
Blackfalds Mayor Jamie Hoover said while inflation added to costs, a jump in policing costs because of a retroactive pay increase for officers and other costs amounted to about two-thirds of the tax rate increase. The tax increase would have been over six per cent had not council opted to hold off on hiring an additional RCMP officer as had been proposed in a long-term RCMP staffing plan.
“It just didn’t seem like the reasonable thing to do this year,” said Hoover.
Inflation, which has had an impact on almost every aspect of municipal operations, from libraries and computers to sidewalks and insurance, amounted to small tax rate increases that soon added up.
Additional costs to the operating budget tallied almost $1.2 million — the equivalent of a more than 10 per cent tax rate increase if no budget pruning had been done.
He understands some residents, facing higher bills on gas, groceries and utilities, will not be happy to add property tax increases to the list.
“We tried. For three years, we had 0.6 per cent (in total tax increases). We did that by using as much of our reserves to try to keep it as low as possible.”
“We couldn’t necessarily foresee eight per cent inflation, but that’s where we’re at now.”
Hoover hopes the budget pressure eases a little next year. Policing costs will not include a big one-time increase, and if inflation eases other cost increases may be more normal.
While municipalities would welcome a return to zero per cent tax increases, councils must be prudent.
“If you try to do zero, then it comes back at you. Ultimately, that’s what we don’t want to do is pass this on to some other council or residents in the future. We just want to keep (increases) modest and manageable.”
Hoover said central Alberta mayors meet regularly and inevitably compare notes on where they think their budgets are heading. Everyone is in roughly the same position this year.
City of Red Deer council began its budget deliberations on Monday. A 4.79 per cent increase is proposed for 2023 and 4.38 per cent for 2024.
City of Lacombe recently approved a five per cent tax rate increase, plus an additional one per cent tax specifically levied to pay for paving projects. Last year, the tax increase was 2.7 per cent plus the one per cent paving tax. In 2021, a 0.8 per cent increase was approved.
Ponoka council approved a four per cent tax rate increase and Town of Olds is looking at an increase in the three- to five- per cent range.
Outside the region, Lethbridge is now considering 5.1 per cent increases over the next four years after holding the line with no tax increases for the previous three years.
Banff council is considering a budget that proposes a 10.26 per cent tax rate increase as a starting point and Canmore is considering a 12.5 per cent increase.