Red Deer’s already modest 2020 tax increase was halved by Red Deer City Council on Monday after a robust debate on the dollars and sense of a zero per cent tax increase.
The majority of councillors eventually gave initial approval to a tax increase of 0.5 per cent, rather than the previously approved 0.96 per cent.
All proceeds from this new lower increase will go towards capital projects, including those that would spur local employment.
Although Coun. Vesna Higham, Tanya Handley and Ken Johnston had argued for a zero per cent tax increase in 2020 — in consideration of the many citizens suffering job loss and other financial hardship — this was not supported by the rest of council who feared taxpayers would end up paying more in the long-run.
Coun. Buck Buchanan noted a series of zero tax increases approved by council in the 1990s caused infrastructure deficits for which city taxpayers eventually had to pay double-digit tax increases to cover. City manager Allan Seabrooke agreed that zero increases are not sustainable — or something he would recommend.
Most councillors also felt holding the line would be too austere at this uncertain time when the city is steadily losing revenue while incurring more in COVID-19-related expenses. Council was told a forecast $5-million deficit for the city was expected by the end of September.
Coun. Michael Dawe noted that city council has already been belt-tightening, passing a very lean budget, even before COVID-19 measures started.
Noting that the provincial government suggesting work begin this year on capital infrastructure projects as a way of generating employment, Dawe successfully advocated for a tax increase of 0.5 per cent — with that entire amount going towards capital projects.
This means $138.3 million would need to be collected through tax requisitions.
By lopping 0.46 per cent from the previously approved 0.96 per cent increase — which was the portion of the increase solely slated for operational expenses — council reached the best compromise, said Mayor Tara Veer.
She said the city is effectively taking a zero increase on its operational side, while still allowing an increase of 0.5 per cent, or about $650,000, to be put towards various infrastructure projects that are important to the community.
The mayor believes it would be difficult to freeze previously approved infrastructure projects, since matching grants and other federal and provincial programs were already applied for, with some of this money already received.
But Handley and Higham felt the 0.5 per cent tax increase did not go far enough to bring down the tax burden for residents. Higham noted the province kept the educational component of municipal taxes at 2019 levels, and the city should have done the same.
Handley had urged council to weigh each expense, looking for any new ways to save money, including reconsidering the 65 outdoor rinks that are maintained each winter.
But Lawrence Lee said council already took a hard at expenses during the earlier budget process. A number of service cuts would impact the community without creating a big savings, he added — for instance, ice rinks are a low expense, as the city owns the boards and community groups provide a lot of the labour in setting them up.
City council also gave initial approval to: no penalties on unpaid property taxes until Oct. 1; no penalties on Business Improvement Area taxes until Oct. 1; and no supplementary property tax or BIA supplementary tax collection in 2020.
Also more city property owners will be allowed to sign up for the tax payment by installment plan without making an initial lump sum payment.