Red Deer County passes budget geared to uncertain times

Municipalities wondering how provincial belt-tightening will affect them

Uncertainty has been a recurring theme as central Alberta councils pass their 2020 budgets.

Economic question marks are coupled with uncertainty about how municipal budgets will be affected by a provincial government bent on financial belt-tightening.

Concerns have been voiced by municipalities that the money they have stockpiled in reserves for use in the future could become a liability.

Red Deer County manager Curtis Herzberg sees a “real possibility” that the province could look to municipal reserves as another source of revenue, or at least a factor in deciding which municipalities are eligible for provincial grants.

Herzberg believes building up reasonable reserves should be recognized for what it is, astute financial planning with an eye to the future.

“If Red Deer County is taxing appropriately and bringing in revenues and saving for long-term things like our bridge program, it would be unfortunate if (other municipalities) which aren’t maintaining adequate tax levels would somehow be in better shape than we are.”

Some of the pushback against reserves is coming from taxpayer lobbyists, who have complained that municipalities continue to raise taxes even though they have plenty of money in the bank.

“I think it’s a bad way of looking at it. It’s a mistake to think of these reserves as something to be targeted by someone else.”

Herzberg said he has seen what happens when financial shortcomings are rewarded. In Saskatchewan, the province stepped in to bail out health authorities that were running deficits, while those who had minded their finances more carefully got no extra money.

Rural Municipalities of Alberta has been vocal on behalf of its members about the importance of reserves, so municipalities can maintain their infrastructure and services.

Red Deer County’s 2020 budget is a textbook case on the importance of having money set aside. The county will draw on $12 million from reserves next year, leaving about $21 million in reserve funds.

“We are in really interesting economic times,” said Coun. Christine Moore, who expressed concern that the county’s relative prosperity could work against it.

“I’m a bit concerned right now that if municipalities have lots of money in the bank, it could be seized,” said Moore.

The operating budget of $54.4 million approved on Tuesday is up from $51.8 million this year. The capital budget is $32.3 million, up from $28.7 million.

In a clear indication of the financial challenges ahead, the budget was built in anticipation that the amount of money pulled in through taxes will drop by five per cent.

While the county is seeing revenues decline on one side of the ledger, costs are increasing on the other.

The province’s decision to pass on a share of policing costs to small and rural municipalities — previously exempt — is expected to add $6 per $100,000 of assessment to ratepyers’ bills.

By 2021, when the share paid by those same municipalities will top out at 30 per cent, the increase will represent the equivalent of a 0.5 per cent tax rate increase, county corporate services director Heather Surkan told council.

Whether a tax rate increase will be coming will not be determined until the spring, when the final assessment numbers are in and the province has told municipalities how much they need to collect in school taxes.

Red Deer County councillors have said they want to keep the tax burden as light as possible, given the difficult economic times.

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