The recession monster has come home to roost at City Hall.
That’s because the government of Alberta — faced with the unimaginable horror of having to control spending — is likely going to pull back more on infrastructure grants, which are crucial to municipalities.
While there are indications that damages from the recession have slowed, it’s anyone’s guess how long true economic recovery will take. It won’t be overnight, that’s for sure. A drive through any Red Deer neighbourhood continues to reveal an unhealthy abundance of parked pickup trucks in driveways.
The federal government’s two-year, $47-billion economic stimulus program — providing funds to infrastructure projects — is slowly helping projects across the country. Much of the benefit from the federal stimulus program isn’t expected to really be felt till 2010.
The thing to remember about government stimulus funding, at any level, is who is ultimately going to pay for that spending — everyone in the country, and for a long time.
Here in Red Deer, you can be sure the focus of city council is on the economy, Alberta’s in particular.
Premier Ed Stelmach has lately looked a bit like someone jumped out at him from behind a corner and yelled “Boo!”
The Alberta Tories have watched their decades of uncontrolled, unparalleled spending turn into a deficit nightmare as the recession takes its toll on revenues.
This municipality will feel the impact.
Chances grow stronger by the day that the Alberta government will cut back its 10-year municipal grant program even further than it already has. This year, the City of Red Deer didn’t receive over $4 million in grants from the province that it had anticipated. The city had expected about $12 million. It’s only getting about $8 million. The city is expecting $29 million in 2010 from the province. It shouldn’t hold its breath for the full amount.
If the province does reduce or fail to increase its grants to municipalities — a most likely scenario — the city foresees the possibility of cancelling up to $140 million in projects over the 10-year plan or, something not being openly stated by the city, finding some other way to fund them.
Reductions in the city’s 2010 capital budget intentions will be in order — unless city council determines significant tax increases and further borrowing are necessary to maintain and move this municipality forward as growth dictates.
The more the city borrows, the more it has to spend on interest, resulting in less money being available for things like new swimming pools, skating rinks, museums and civic centres.
The good news is that projects approved in the 2009 capital budget are running lower than budgeted, thanks to the recession. Hopefully in 2010 — unless foolish demands arise amidst delicate economic recovery — the boom’s evil inflation spiral, now deceased, departed and buried, will be a distant memory.
At the end of this year, the city’s estimated total debt — all to fund planned capital projects — will be $271 million. By 2018, Red Deer’s debt is expected to hit about a half billion dollars by 2018.
With less provincial money, city council and management are going to have to reduce the city’s most ambitious capital projects schedule ever, borrow more or drag municipal taxpayers — many of whom had suffered immensely during this recession — more into play.
In just about a year, we’ll be heading into a municipal election — which makes the city’s upcoming capital and operating budgets all the more interesting.
The proposed capital budget will be revealed in December. The draft operating budget will be looked at early in the new year. Taxpayers now have as good an opportunity as any to express their spending views to city council.
Mary-Ann Barr is Advocate assistant city editor. Her column appears Mondays in the Advocate and online at www.reddeeradvocate.com. She can be reached by email at email@example.com or at 403-314-4332.