A sluggish Alberta economy and provincial government financial tinkering could shrink Red Deer County’s tax base by five per cent.
It is “very rare” for a municipality to see total assessments drop in value, said county manager Curtis Herzberg, who cautioned the decrease is a projection, and hard numbers will not be available until February.
“It’s as tough a year as we’ve ever had to predict assessment.”
Property values are expected to drop slightly because of the lingering economic downturn.
On top of that, rural municipalities can also expect fewer taxes from the energy sector. The province intends to reduce the taxes the oil and gas industry pays to municipalities to help out the struggling sector.
The county’s 2020 operating budget is expected to be $54.4 million, up from $51.8 million this year. Capital spending will increase to $32.3 million from $28.7 million.
In anticipation that fewer tax dollars may roll in, the county has built its 2020 budget to absorb a five-per-cent assessment reduction scenario.
Whether the county will need to increase tax rates after years of holding the line will not be known until the spring, said Mayor Jim Wood on Tuesday, after council got its first look at its 2020 operating and capital budgets.
He emphasized that while county residents may see the assessed values of their properties drop, that does not mean they can assume a corresponding decrease in their tax bills.
“I don’t want to give the perception to the public we’re going to see a tax reduction,” he said. “That may not be feasible at all for Red Deer County.”
Wood said in light of the coming financial challenges, the county has created a “cautious budget” that maintains the services that residents expect and that help draw new residents, businesses and investors.
Council gave the budgets first reading and is expected to approve them at its Dec. 17 meeting.
“I’m looking forward to hearing from the public in the next two weeks, so we can make our decisions on this,” said Wood.
The budget anticipates pulling just over $12 million out of the county’s reserves in 2020 to balance the budget, while maintaining service levels.
Just under $2 million in reserve cash is being used to offset a reduction in provincial grants under the Municipal Sustainability Initiative, a long-running program that helps communities cover operating and capital costs.
Meanwhile, council voted to write off $2.4 million in unpaid oil and gas taxes to qualify for a provincial refund program. To help ease the financial pain for municipalities, the province has agreed to refund the school tax portion of energy industry debts.
The county will get $510,000 back under the program.