Updated: Red Deer County freezes taxes

Tax rates won’t increase in 2020 to help residents facing financial hardship

Red Deer County is freezing tax rates for 2020, to help residents coping with the financial pressures created by a slumping economy and the pandemic.

“This is a very stressful time for a large number of Albertans,” said Mayor Jim Wood.

“We are doing our best to ensure that municipal taxes will not create a burden on our residents and business owners.”

Council opted not to raise taxes despite anticipating that tax revenues will drop by two per cent this year, because of an assessment base that is expected to fall by $100 million.

That will reduce the amount of taxes collected to around $46 million — $2 million less than expected. The county’s operating budget is $60.2 million and the capital budget $30.5 million.

“That’s huge,” said the mayor of the county’s tax freeze plan, adding “because even keeping the tax rate where it is, we’re reducing the amount of money coming in.

“The relief we’re providing through these measures today is extremely important.”

To help balance the budget, the county is dipping deeper into its reserves than originally planned.

“If those are for a rainy day — it’s raining, it’s pouring,” he said.

Coun. Christine Moore said, “this is temporary, but it is something that is needed right now.”

To further help those who are having trouble making ends meet, the county will defer late tax payment charges until Oct. 1, instead of the usual July 1. The late payment charge has also been reduced to four per cent from six per cent.

Given the likelihood that revenues will trickle in slower than usual this year, the county has prepared to borrow up to $45 million from a line of credit in a worst-case scenario.

Earlier this year, the county boosted its borrowing room by $5 million, up to $30 million. That increase was in anticipation of an energy industry slump, and came before the pandemic added a new financial twist.

“Normally, the county collects the bulk of tax revenue by the end of June, but with the deferral, we are likely to see a great deal of our tax revenue collected in September,” says a report to council from corporate services director Heather Surkan.

“This creates a gap in cash flow during our construction season, where most of our spending occurs.”

Temporary borrowing will tide the county over until taxes flow in.

In light of the economic situation, council also voted to delay a new tax levy for environmental projects until next year.

Coun. Connie Huelsman said she had heard from a couple of residents who applauded the county’s decision to hold the line on taxes.

The repercussions from the pandemic will be felt at budget time next year as well, Huelsman predicted.

Red Deer city council voted on Monday to nearly halve its proposed 0.96 per cent tax rate increase to 0.5 per cent.



pcowley@reddeeradvocate.com

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