City council is sticking with proposed property tax hike guidelines while pledging to find ways to lower the number. (File photo by Advocate staff)

City council is sticking with proposed property tax hike guidelines while pledging to find ways to lower the number. (File photo by Advocate staff)

City council approves tax increase guidelines of up to 4.7% and 4.3% for 2023, 2024

Repeat withdrawals from reserves are not sustainable, council is told

Red Deer city council stuck with proposed property tax increase guidelines of up to 4.7 and 4.3 per cent for the next two years — while pledging to seek ways to lower these numbers.

Mayor Ken Johnston said on Monday, just before city council approved multi-year budget parameters for 2023 and 2024, that the city will continue to be competitive when it comes to property taxes.

Johnston noted the Red Deer always comes in at the lower or mid-range for residential taxes and at the lowest end for business taxes.

He doesn’t expect this to change — even though rising inflation, fewer provincial grants, and zero municipal tax increases over the past two years have put city council in the position of giving some residents “sticker shock” with rising tax increases for 2023 and 2024.

Johnston stressed proposed tax hikes of up to 4.7 per cent for next year and 4.3 per cent in 2024 were just parameters that council has set out for administrators to do future budget planning around.

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Council will work diligently during budget deliberations in December to bring in lower property tax increases, if possible, he added.

Coun. Vesna Higham had unsuccessfully attempted to lower the proposed tax increases to “up to 3.5 per cent” for each of the next two years. Higham explained this would force city administrators to look at additional belt-tightening measures — including service reductions — to bring smaller budgets back to council.

Perhaps less grass mowing or road maintenance could be done, she added, noting other options could be explored beyond reducing recreational or transit hours.

But Interim City Manager Tara Lodewyk said program reductions can’t be managed effectively without first surveying the public about what is acceptable as service cuts generate the most emailed complaints.

Lodewyk pointed out that the city already made a major staffing reduction in the fall of 2020, cutting more than $5 million in salaries through voluntary retirements, attrition and layoffs.

Coming out of the pandemic, remaining workers are experiencing fatigue, she added, noting zero new projects have been proposed for the next year because “we need to finish what we’ve started.”

To achieve the zero per cent tax increases for 2022 and 2021, “we had to dip into our operating reserves… But it’s not meant as a long-term solution — it’s not sustainable,” said Lodewyk.

The majority of city councillors agreed that having sustainable tax increases for the next two years would be necessary.

Coun. Lawrence Lee noted that 27 city departments already crunched numbers and came up with feasible proposed tax increases of up to 4.7 and 4.3 per cent. He noted the words “up to” mean city council is not tied to these numbers and can still discuss ways to lower the tax increases at budget times.

“It seems out of character for me,” said Coun. Victor Doerken, but he spoke against setting an arbitrary up to 3.5 per cent tax increase guideline for the next two years, as suggested by Higham.

“To meet it, we would have to continue to raid the cookie jar” (or city operating reserves), said Doerksen, while he feels “we have to work to bring our reserves back up” so the city retains a good financial position in case of future emergencies.

In the end, only Higham, as well as Councillors Kraymer Barnstable and Michael Dawe voted for the up to 3.5 per cent tax increase guideline amendment — and it failed.

Council heard that while Red Deer took money out of operating reserves to facilitate zero per cent tax increases over the past two years, most other Albertans had their property taxes hiked — including a near four per cent increase for Calgarians in 2022.

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Red Deer City Council