Red Deerians can expect zero per cent tax increases in 2021 and 2022, according to city council’s directive to administration.
Coun. Dianne Wyntjes noted this will amount to having less-than-zero per cent tax increases in the next two years, as council is still putting half a per cent (or about $650,000) of the operating budget aside annually towards capital projects.
She expressed alarm at opting for so much belt-tightening on the spur of the moment Monday.
Chief financial officer Dean Krejci hadn’t suggested making quite as deep cuts.
After considering revenue losses due to the poor economy and the pandemic, Krejci came up with an austere multi-year budget proposal that highlighted finding $20 million in cost savings.
Krejci recommended property taxes go up half a per cent in 2021 and 2022, which would allow the 0.5 per cent to go towards future capital projects.
Instead, councillors Michael Dawe and Tanya Handley suggested an amendment for the two zero per cent tax increases in 2021 and 2022, as well as administration putting aside $650,000 annually towards capital reserves.
Dawe said this would put the city in a good position to capitalize on any new building projects that the province makes available to municipalities, which would require matching grants.
An impassioned Wyntjes — the only councillor to vote against this amendment — told her council peers they are doing a disservice to administration by coming up with this tax freeze amendment out of the blue.
Council has no solid knowledge of what the city’s financial position will be next year, she explained, or whether other levels of government would offer any financial relief to municipalities hit hard by the pandemic.
Such an impactful change should have been discussed at recent workshops with the city manager, said Wyntjes — before it was suggested in reaction to an earlier unsuccessful austerity move attempted by Coun. Vesna Higham.
“We don’t know the significance of the change we made today,” added Wyntjes, who noted the city’s finances are in a state of flux, with revenues down due to virus reduction measures, and utility and tax deferrals.
While many residents and some businesses would appreciate a tax break, several councillors suggested they might not like what this will mean for city services, including road maintenance and snow removal.
“There are always repercussions,” said Wyntjes — whether it will be staff cuts, a reduction of recreation centre or library hours, transit changes, or less money for agency requests.
Noting that city manager Allan Seabrooke previously stated that zero tax increases were not favourable because they were unsustainable, she said it’s council’s job to protect the city’s future.
While others on council felt the municipality could shoulder a zero per cent tax increase for a couple of years, they still acknowledged strain will be felt.
Coun. Lawrence Lee predicted the city will be challenged to maintain its payroll commitments to unions and staff associations.
Every funding request that comes before council in 2021 and 2022 — “whether grass is mowed on a berm, or if (residents) wish the recreation centre to stay open longer” — will be considered in context of what difference it makes to the bottom line, said Lee.
Coun. Buck Buchanan referred to the years of high tax increases that followed a series of tax freezes in the 1990s as the city scrambled to shore up neglected infrastructure.
“You can pay now or you can pay later,” he said.