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Budget 2019: Getting to 0%

This week I published two very optimistic blog posts. One outlined my four goals: to increase funding for crime, roads, and Leisure Centre planning without raising taxes. The other outlined City initiatives that will help us better spend and target money. I feel very optimistic about the upcoming budget.

That being said, I also do want to acknowledge a challenge before us. There are added expenses and financial pressures in 2019 that did not exist in 2018. We need to raise our fiscal capacity just to maintain services. We’ll need to raise it even more if we want to increase them.

These challenges are outlined below.


INFLATION

Everything the City does gets more expensive year-over-year due to inflation. The Alberta Consumer Price Index is 2.4%. This means that if the City provides the exact same services with the exact same level of efficiency in 2019 as in 2018, we will still need to find a way to increase our taxes by about 2.4%.


DOWNTOWN, GRANDSTANDS and OUTDOOR POOL

The Bear Creek Outdoor Pool will be open next spring (for real!). Additionally, the CKC Grandstands were opened this year. I haven’t seen their proposed budgets yet, but I would be very surprised if their combined operating cost was anything less than $500,000.

There was also debt taken out for phase 3 of the Downtown Rehabilitation Project. This has a servicing cost of a little over $800,000/year.

With this new infrastructure, the City has over $1.3 million in new expenditures for 2019.

(If you want to see what went into considering the new downtown debt, click here. I wasn’t on Council when the Grandstands and Outdoor Pool were voted on so cannot speak to those decisions)


RESERVE FUNDING

Last year, Council opted to draw $1,000,000 from reserves to fund part of the operating budget. While I was not supportive of drawing from reserves, I saw justification in this: we were at the end of a recession (you can see more discussion here). Now that the economy is doing much better, I have not heard anyone suggest we draw from reserves to fund operations. If we want to leave reserves alone, then $1,000,000 of capacity needs to be found in 2019 to keep up with 2018.


Potential Tax Increase to Maintain the Status Quo

Say Council wanted to maintain the Status Quo on everything but taxes. It insisted that we deliver the exact same services in 2019 as in 2018 without asking for more efficient delivery or new funding sources. It said “keep things exactly the same and just raise taxes by however much you need to do that.”

The City would need to raise taxes by 2.4% to keep up with inflation.

And then it would still need to find ~$2.3 million to pay for new facilities and to makeup for leaving reserves alone.

Based on last year’s tax levys, for every extra $1 million, Council needs to raise taxes by about 0.9%. Multiply 0.9% by 2.3 million and you get 2.1%. Add this to the 2.4% from inflation and you get 4.5%.

Just to maintain the current state of operations, Council needs to find new fiscal capacity equal to a tax increase of about 4.5%.


The Status Quo Isn’t Good Enough

The Status Quo isn’t acceptable to me. We need to do more and we need to do it better. I want us to do more for roads, safety, and the Leisure Centre while having a tax freeze. I think our community needs all of these. I also think the majority of our residents support these goals.

But that 4.5% of extra fiscal capacity we need poses a challenge.

Through Lean and Priority Based Budgetting, we are doing significantly better with the resources we spend. Even with the 4.5% challenge, just by working at how we spend money I think Council could either maintain services with no tax increase or raise taxes a bit while expanding some services. However, I don’t want to do one or the other. I want to increase some services while also holding the line on taxes.

This means that we can’t just look at our expenditures. We also need to go to the other side of our balance sheet to look at revenue.

In my next post, I’ll be sharing options Council has to increase revenue besides raising property taxes. I look forward to hearing what you think.

In the meantime, the City’s budget survey is up. Please take a few minutes to fill it out by clicking here. Also, don’t forget about the November 4 Budget and Coffee meeting I’m hosting: click here for more info.

Thanks for reading!

-Dylan