Red Deer City Hall. (Advocate file photo)

Red Deer City Hall. (Advocate file photo)

Red Deer city council narrowly maintains a zero tax increase for 2022 budget

This means a tax increase of at least 3.42 per cent is coming in 2023

The 2022 budget for the City of Red Deer was approved on Monday with the promised zero tax increase — and a warning that a tax freeze will not be sustainable in the longer term.

All increased costs for next year will be covered out of city reserves — which is only possible due to the prudent saving decisions of “our predecessors,” interim City Manager Tara Lodewyk told council.

But with rising inflation and unexpected costs now downloaded to municipalities, administration anticipated a tax increase of at least 3.42 per cent will be needed for 2023 — unless the city opts to reduce services.

Coun. Lawrence Lee attempted to “soften the blow” for taxpayers by changing the zero increase for 2022 to a 1.5 per cent increase. This could then be followed with a similar increase in 2023. He argued that a zero increase really means deferring the costs to down the road when taxpayers could be hit with unpalatably high taxes.

Coun. Cindy Jefferies was among the councillors who supported Lee’s motion, saying a series of zero increases in the early 2000s created years of catch-up on infrastructure repairs and the need for near double-digit tax increases that followed.

But Mayor Ken Johnston, along with Councillors Kraymer Barnstable, Bruce Buruma, Michael Dawe and Vesna Higham, voted to keep the zero per cent for 2022. Their rationale was: that this promise was made to taxpayers; that area residents and businesses are still hurting because of the pandemic; that administration thought zero per cent for 2022 was do-able; and that more consultation was needed with the public and city staff about programs and services before making a spur-of-the-moment decision.

In following the wishes of the last council, budgets for 2021 and 2022 were created without increasing taxes and passed in November 2020, Lodewyk said the extra millions needed to cover additional expenses, such as overtime pay for emergency services workers and higher policing costs, will be covered out of savings.

But she cautioned this kind of reserve spending can’t be maintained over the longer term, without a need for “trade-offs” in the years ahead.

By 2023 it will be necessary to either raise taxes or reduce service levels — especially in light of growing inflation rates, said Lodewyk.

Chief Financial Officer Ray MacIntosh said there’s a need to maintain a healthy reserve. Although he didn’t see an imminent problem emerging, he added he’s getting somewhat concerned about repeated draws on city savings.

The approved operating budget for 2022 totals $384.9 million and is primarily funded through property taxes as well as user fees and sales of goods and services. Council approved some new operating items on Monday with an additional value of $5.42 million.

These include $230,000, largely needed for staff contractual obligations for a federal statutory holiday the new National Day for Truth and Reconciliation, and $2.3 million needed for RCMP raises and retroactive pay to bringing them to the same level as most municipal forces.

Also, an additional $200,000 was approved to cover the cost of RCMP laboratory tests — which had been previously paid for by the province but were downloaded onto municipalities.

And $1.2 million was approved to cover anticipated Emergency Services overtime — although the city’s Protective Services Director Ken McMullen said his staff are burned out and have never been less capable of handling overtime beyond their shifts. Part of the problem, he explained, is the long waits at hospitals with ambulance patients while a bed is found for them.

As well, $525,235 was approved to keep operating the Social Diversion Team through 2022. The successful pilot project had entailed someone who sees a social disturbance in the city to dial 211 and a team of experts are sent to deal with it, freeing up police time for more urgent matters.

While a budget freeze means that no additional funding will be collected by the city through higher property taxes, property owners could still see changes to their tax bills in 2022, based on changing property assessments, as well as the provincial education requisitions that are collected through municipal property tax bills.

The 2022 approved capital budget (for repairs or new infrastructure) totals $75.1 million and is funded through debt, operating transfers, grants, reserves and developer/customer contributions. Administration put forward several additional capital projects for city council to consider, which will mean another adjustment to the 2022 capital budget.

These include a new $2.3 million pumper/ladder truck, needed to replace an aged one for the fire department, and $3.5 million for a new waste facility that will separate slurry into water and soil, which can then can be dumped in the landfill.

Mayor Johnston said a streamlined budgetary approval process for the next four years, 2023-26, will be deliberated next fall to build on creating more efficient and far-sighted budgets for the city.

Red Deer City Council