Dipping into municipal reserves was a main factor in the City of Red Deer’s ability to reduce the property tax increase to its lowest in 10 years.
A small municipal property tax increase of 3.3 per cent could have been much higher without the city having access to other funds to pay for its projects and services.
The operating budget ended up higher and yet the municipal tax increase was lower than first submitted by administration. Council approved the budget at $232.7 million when it was originally at $221 million. The municipal tax increase was now 3.3 per cent instead of 4.06 per cent.
Using reserves played a big role in the city being able to achieve a higher amount, without hitting taxpayer wallets.
“Some of the money is coming from our reserve accounts, so we don’t have to ask the taxpayer,” said Corporate Services director Lorraine Poth.
The city took a total of $9.15 million from reserves for tax-supported operations.
The city also has access to revenues and grants, which help to support the increased budget but keep taxpayer costs down. Government grants totalled $11.3 million, which are included in the total revenues of $243.07 million.
The difference between the total revenues and the total operating budget is then transferred to reserves or to help fund the capital budget.
The base budgets for each departments were kept tight this year.
Three other components affect the operating budget — items carried forward from previous years, impacts of prior year budgets and additional funding requirements sought by departments.
Some of them don’t impact taxes, like items carried forward from previous years were paid through reserve transfers. These are items, like last year’s $134,000 budgeted for firefighter bunker gear, that don’t see all the money spent by year-end. So the leftover money is put into a reserve, so it can be used for that item in the next year. This year’s items carried forward from previous years totalled $819,000.
Impacts of prior year budgets came in at $3.55 million.
“We might hire a person partway through the year in 2009 and then in the following year’s budget when that person is there for a full year, we have to provide the additional six months of funding,” said Financial Services manager Dean Krejci.
Council was asked this week to decide on $11.2 million requested by departments. After some debate, they approved everything except for $49,500 for two staff positions. The net impact to the tax base was only $2.5 million, in part because provincial grants help pay for some of these extras.
The $221 million came in at $232.7 million, thanks to the $11.2 million and the $819,000 added in. The impact of prior year budgets was already factored into the base budget.
The final result was a 3.3 per cent municipal tax increase.
The bill for an average home assessed at $280,000 will now be $1,519. Last year, that same home would have been charged $1,470 or $49 less than this year.
Municipal tax bills will increase or decrease based on property assessments. Those assessment notices are being mailed out.
Once the educational tax rate is finalized and combined with the municipal rate, then the final tax rate will be known to Red Deerians.
ltester@www.reddeeradvocate.com
