Government is forced to balance the wants and needs of citizens with the fiscal restraint required to enable economic prosperity.
Tax too low and government will be unable to provide adequate services and maintain facilities like swimming pools and arenas.
Tax too high and residents will feel the pinch, consumer spending will suffer, businesses will leave the area and our economy will falter.
As Red Deer city council prepares to deliberate the 2017 operating budget, it is worth considering the many forces that will guide discussions and why we, as the Red Deer &District Chamber of Commerce, are advocating city council pass a budget that does not require an increase to our taxes.
First off, it is worth noting that Red Deerians want nice facilities and top-notch services. Fortunately, according to the 2016 Citizen Satisfaction Survey, the vast majority of people are either somewhat, or very satisfied with the level and quality of services in our city. Some 96 per cent of people are satisfied with our recreational and cultural facilities, 87 per cent for police services, 86 per cent for streets and sidewalks, and 71 per cent for snow clearing.
Despite receiving an 87 per cent satisfaction ranking for police services, Red Deer has the highest crime severity index in Alberta and we ranked as Canada’s 11th most dangerous city by Maclean’s. In the Citizen Satisfaction Survey, the majority of survey respondents identified policing and crime prevention as the top priority over the next year.
So when it comes to spending, we know that people are very satisfied with city services (kudos to the city and staff), but work needs to done on the issue of crime and policing.
The other important outcome of the budget will be how it affects our economy. Last year was an incredibly tough year for our city. Thousands of citizens joined the ranks of the unemployed as businesses filed bankruptcy or cut staffing levels by up to 90 per cent just to stay afloat. Meanwhile, our provincial government introduced a number of tax increases and policy changes that have increased the overall cost of doing business. Profits are down considerably, and with it, businesses ability to meet additional financial obligations.
As a rule, higher taxes slow economic growth. If residents pay more in property tax, they’ll spend less in the economy. If a business pays more, it’ll have less to spend in wages and to put towards capital growth. It is also important to consider that Red Deer does not operate within a vacuum. If taxes are higher here than in neighbouring municipalities, residents and businesses alike may choose to locate in neighbouring lower cost jurisdictions.
Our economy is back on the path towards prosperity, but we can not take the recovery for granted. We continue to operate in a very fragile state dependent on fluctuating commodity prices and a tenuous global economy. Those with the ability to do so, should do everything within their power to ensure the best possible recovery is realized.
We also have to ask ourselves if are getting the absolute best value for our tax dollars. Is every dollar of the $357 million budget really be necessary? Is it reasonable that between 2004 and 2014 the City of Red Deer real operating spending increased by 89 per cent while our population only grew by 30 per cent? The quality of government services isn’t just a function of how much money is spent. Like any operation, the quality of the service will vary depending on implementation.
It is a basic principle for all individuals, families, and businesses to get the absolute best value for what we spend. We do this by avoiding unnecessary spending, shopping around, negotiating, and making sacrifices when we have to. You avoid being complacent with what is easy and what is the status quo ,and you make difficult decisions if it is the right choice.
If the vast majority of Red Deer citizens are satisfied with city services and our economy is in a fragile state, freezing taxes is the obvious choice.
Reginald Warkentin is the Red Deer &District Chamber of Commerce’s policy and advocacy manager.