Red Deer city council will be considering a hold-the-line 2020 operating budget that only retains existing service levels.
Yet taxpayers could still face a 2.49 per cent tax increase in the new year if the proposed budget is approved by council.
The recommended $385.7 million operating budget was presented to city council on Thursday by Red Deer’s City Manager Allan Seabrooke.
He said it’s based on being sensitive to the difficult economic climate, being cost-effective, and being efficient in the delivery of city services.
But Seabrooke knows some people will still balk at the proposed nearly 2.5 per cent tax increase.
“We understand that any amount of tax increase, especially in this time of economic austerity, is disappointing to our residents,” added Seabrooke.
Unless council opts to change past practise, one percent of the proposed 2.49 per cent increase would go towards future capital projects. Seabrooke said this is needed so the city can continue to deliver on all the amenities in its 10-year capital plan.
That would leave a 1.49 per cent increase to cover inflationary operating costs.
Seabrooke said the city must still purchase items that go up in price every year.
To have a complete tax freeze in 2020 would strain the city over the longer term, he added, because it would effectively mean a budget reduction under which building maintenance could not happen and service reductions would be necessary.
While the economy “has not rebounded as quickly as we would have expected or liked,” Seabrooke said the city still needs to deliver “quality of life” services Red Deerians expect, while trying to find ways of attracting new investment.
The city’s proposed budget was also impacted by a reduction in provincial dollars. But Seabrooke said about $5 million in savings were achieved by administration through factoring staffing turn-over and some salary savings through vacant positions, and by reduced transfers to capital reserves in the short term.
Mayor Tara Veer said city council does not expect to add any new employees next year, except for the few additional new police officers already approved for 2020 as part of last year’s budget.
With the protracted recession and a drop in municipal revenues, Veer added that the city is “on the cusp of a watershed moment.”
At some point soon it will be hard to keep taxes and utilities as low and still maintain existing programs, she added.
If city revenues don’t recover, taxes or user fees might have to go significantly higher, or city council will have to have some difficult discussions about reducing service levels, she added.
Seabrooke feels that the $2,300 in city taxes paid annually by owners of an average $325,000 home are great value, considering everything that Red Deerians get — from clean water to policing and transit, to recreational infrastructure.
“It’s about the best deal going…”
City budget talks will begin on Jan. 7 and are scheduled for five days.