The City of Red Deer is in good financial shape but city council and administration face challenges ahead, due largely to trying economic times.
In Tuesday, council was presented with a mid-year budget review and also approved a further $2.3 million in 2016 spending, to be funded through reserves or grants.
One of the main concerns ahead is a large projected reduction in revenues from private construction, from $2.5 million this year to just $1 million next year. Revenue from new construction is usually a year behind.
City manager Craig Curtis noted the economy is contracting, housing starts are down and unemployment has hit 10 per cent.
At the same time, while public projects such as the downtown arena and the Gary W. Harris Centre for Health, Wellness and Sport at Red Deer College do not bring in tax revenue, they do bring economic development.
As well, increased grants coming from the provincial and federal governments are going to help, he said.
The provincial carbon tax levy on Jan. 1 is expected to cost the city almost $600,000 over 2017 and 2018. The city also expects that some of the products it buys, such as fuel, will also increase directly as those providers deal with the carbon tax, Curtis said.
On the positive side the city is in a comfortable position with servicing its debt, and long-term borrowing rates are low. Red Deer’s per capita debt is $2,590. At its peak in 1983 it was $3,520 (in 2016 dollars). However if the city goes ahead with its full capital projects plan, that 1983 number is expected to be exceeded in a few years.
To deal with economic concerns, Curtis said the city could postpone some projects, not undertake certain new initiatives, continue to look at cost inefficiencies and look at areas where the city could gain additional revenues such as franchise fees.
Chief financial officer Dean Krejci said that overall the city is in good financial shape.
But he said that while this year’s budget projected transfers to reserves would amount to $16 million, the actual amount is expected to now be only $5 million.
He said that when it comes to construction growth, if there was a significant improvement in 2017, the city would see the benefit in revenues as soon as 2018.
Council approved $2.3 million more in 2016 spending:
l $38,650 for the Collicutt Centre parking lot lighting upgrade, funded by a grant
l $335,000 to upgrade the city’s radio system, funded by reserves
l A maximum of $198,370 towards construction of all-weather washrooms, concession and an outdoor space for community gatherings at the new Westpark Middle School site, funded by reserves
l $1.578 million for a Gaetz Avenue/Taylor Drive and Hwy 2 Electric, Light and Power Services feeder line realignment, and $$153,000 to design Taylor Drive and 19th Street intersection improvements, funded by reserves