City council trims debt limit by 15%

City council has put a cap on how far the city can go into the red.

City council has put a cap on how far the city can go into the red.

On Monday, council voted 6-1 to reduce the city’s allowable debt limit to 75 per cent from 90 per cent.

Coun. Tanya Handley brought the motion to council after hearing concerns from residents about the city’s debt.

By reducing the limit, Handley said, it gives the city debt room to respond if there is a natural disaster or an emergency.

Handley said this ensures council takes a very close look at spending and when the city uses debt to finance projects.

“It really comes down to showing the community that we are concerned about debt and we are concerned about financial leadership,” said Handley.

The province limits the amount of debt that a municipality can hold. The city has roughly $222 million in long-term debt with a debt ceiling of $501 million.

Most councillors echoed Handley’s sentiments about having the ability to respond to unforeseen circumstances.

Coun. Lynne Mulder, however, said she could not support the motion at this time. Mulder said the motion felt like something pulled out of the air and that it should be discussed around budget time in context with reserves.

“It just doesn’t fit for me right now,” she said. “That’s my reservation. I won’t be able to support it right now.”

Mayor Tara Veer said the change is consistent with the city’s other financial tools including its new capital savings plan.

She said the capital savings plan positions debt as one tool of many to finance infrastructure projects.

“From my view it was perfectly reasonable to reduce the debt cap from 90 per cent to 75 per cent,” said Veer. “I think it is highly responsive to the changes we have in our economy and what we hear from our citizenry.”

In other council news:

lResidents who do not pay their taxes on time may now be hit with penalties twice in a year.

Council gave first reading to a tax penalty bylaw that would restructure the tax penalty dates to apply twice per year. Under the proposed scheme, residents would be charged on July 1 and September 1. Tax arrears would begin as of January 1 of the following year.

Mayor Tara Veer said the previous plan was highly bureaucratic and the penalties were applied every couple of months. Veer said this change is the first of many to come to find administrative efficiencies.

“It also gives citizens more time to plan and to meet those tax requirements and tax penalty requirements,” said Veer.

The 12 per cent annual penalty rate would not change.

Property taxes collected on June 30 are used to fund services from January 1 to Dec. 31.

Over the last two years, 97 per cent of property owners in Red Deer paid taxes owing by June 30 or were enrolled in the tax instalment plan.

The 2015 budgeted penalty revenue is $575,000.

Second and third reading will be before council on July 20. The bylaw will take effect Jan. 1, 2016.

lCoun. Paul Harris read a notice of motion asking the city team up with Red Deer College to call on the province to change the status of RDC to a Polytechnic University. His motion will be debated at council on July 20.

Councillors Dianne Wyntjes and Lawrence Lee were absent on Monday.