Opinion: City must aim for zero per cent tax hike

Red Deer city council is discussing the benefits of multi-year budgets, which is a model other municipalities have adopted.

Instead of producing budgets annually, the city would set spending levels and tax rates three or four years into the future.

On the surface, there is common sense behind the notion. Municipalities are already required to produce three-year financial plans and five-year capital plans. Crafting budgets that align with these aspirations would appear reasonable.

Such logic should be approached with skepticism, however. Multi-year budgets usually have modest tax and spending increases in the initial years, and then more worrisome hikes in the final years.

It’s human nature not to worry about negative consequences that are going to occur in the future, so taxpayers are inclined to agree to higher taxes in the future for the appearance of stability today.

It’s the same reason many consumers buy cars and other products on borrowing programs that offer low payments over a long period of time, with a punishing price to pay it all off.

Red Deer’s municipal tax increases haven’t been as steep as those in some communities, and our politicians deserve credit for that. Still, if the city is going to adopt multi-year budgets, the tax impact should be zero per cent annually.

To say the region is still paying an economic price for upheavals in the energy sector is an understatement. Everyone knows of people who have lost their jobs because of business closures or cutbacks. It’s fair to say the carnage isn’t over yet.

Politicians have a tendency to think their work is so important, it couldn’t possible be restrained and not allowed to continue to grow. There are pricey consultants to hire, bulky reports to produce and all manner of fuel necessary to keep the wheels of government inefficiently turning.

In the real world, of course, such thinking isn’t possible.

A business that confronted declining sales with higher costs and higher prices would be forced to close its doors in no time.

Within most businesses, managers have been instructed to do more with less in recent years because of the economic downturn. That’s meant discovering more efficient ways of doing things, finding suppliers who can provide goods and services at a better price, and abandoning some activities that can’t be justified.

The managers who haven’t been able to adapt to the new reality have doubtlessly been shown the door.

The same expectation is true of elected and non-elected officials at city hall.

The new provincial government has signalled its determination to get its financial house in order. Inherently, that’s going to have an impact on municipal finances, because the transfer of cash is going to be reduced or remain stable.

The sooner the city adopts a policy of zero per cent tax hikes, the better. If administration isn’t up to the task of determining the difference between nice-to-haves and must-haves, that’s a problem.

And if elected politicians can’t rise to the necessary challenge they face, well, there’s an election in two years.

The voters will have the opportunity to choose candidates who can make the tough decisions that are necessary.

David Marsden is managing editor of the Red Deer Advocate.

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