Budget 2025 Deliberations: 5 Things to Know

It’s that time of year: BUDGET!

Next week, Council will be debating the 2025 Budget. I’d encourage you to take sometime to give the recommendations from Administration. You can find them in this draft budget book.

Five things to know as we get into these important discussions:

Cost Control is always a priority. But heading into 2025, Administration has put renewed focus into reducing costs wherever possible without having a large impact on services.
Despite efforts to reduce cost, there are still large upward pressures on the City’s Budget. The two big ones this year: the cancellation of a Stormwater Fee and Inflation. Additionally, financial changes from the last few years are still having a huge impact.
Administration is recommending a tax increase of 4.75% which would cost an average single family home $12.82/month. While this is higher than I like to see, it is lower increase than a lot of other Alberta cities are facing. It will also still mean that taxes have only gone up by about half the rate of inflation over 8 years.
The Grande Prairie Police Service (GPPS) is is budgeted to cost municipal taxpayers less in 2025 than it would’ve cost to maintain the status quo RCMP contract.
There are a variety of service enhancements, service cuts, and non-tax revenue strategies that Administration is recommending Council consider adding into the budget to change the 4.75% increase number,

Below is an unpacking of these five subjects.

Cost Control

Reducing costs is always a priority. But this effort has renewed focus heading into 2025.

There are significant headwinds on the City’s finances (see below). If no changes got made to operations, we would’ve required a double digit tax increase in 2025. That’s not acceptable.

So heading into Budget, City staff in all departments have been identifying areas where they can save money without making big service impacts that would be noticed by residents.

There are many areas where Administration has proactively reduced costs. One example you can see if you compare the 2024 and 2025 Budget Books: a streamlined Organizational Chart. In the 2024 budget, there were 5 Chiefs responsible for 26 departments. In 2025, Administration is planning to scale down to 4 Chiefs responsible for 17 departments. This means less money spent on managers. It also creates opportunities for staff offering different but complementary services to find more efficiencies when they are together in one department. This is one of many examples where Administration is changing how it operates to reduce costs.

Stormwater, Inflation and Other Headwinds

There continue to be significant upward pressures on the City's budget. The two biggest challenges for Budget 2025: Stormwater and Inflation.

Last year during budget deliberations, Council planned to implement a Stormwater Management Fee. This would’ve seen stormwater services get funded by a fee based on usage rather than through taxes. It represented ~$4 million of revenue that was built into our multi-year budget. However, in the spring, Council decided not to implement a new Stormwater Management Fee. But we still have an expensive stormwater system which needs to have its operations funded. Which means we need to collect more taxes in 2025 than we had originally planned. This revenue need is equivalent to a tax increase of ~2.5%.

Additionally, just like everyone else, we need to grapple with inflation. Everything from fuel for City vehicles to contractor services to facility maintenance materials to photcopy paper will cost a little more in 2025 than it cost in 2024. And for most employees, the City is contractually obligated to provide inflationary increases to compensation. Just like every other organisation, our costs are going up with inflation.

Inflation and Stormwater are the two biggest headwinds we face going into 2025. But there are other pressures we’ve been facing for years whose impact is catching up. These include a ~50% decrease to provincial infrastructure funding, RCMP contract costs which have gone up by ~40%, plummeting court fine revenue, and costs related to taking over operations of the old Bypass. Additionally, we have funded several new programs including the Outdoor Pool, Activity Reception Centre, driveway windrow removal, and Mobile Outreach Program.

These headwinds all put pressure on the City’s budget. They mean that we need to not just reduce costs, but also increase revenue. And we aren’t alone in that: municipalities across the province are facing huge budget pressures. Which is leading cities across Alberta to consider large tax increases. For example, Edmonton is looking at an 8.1% increase, Medicine Hat 5.6%, Red Deer 11.25%, St Alberta 4%, and Airdrie 7.5%.

Tax Increases Vs Inflation

Due to inflation and the loss of planned Stormwater Fees, it is impossible to maintain current service levels without a tax increase. At the same time, I don’t think the majority of residents have an appetite to see large service reductions.

In order to continue the current service levels, Administration is proposing a tax increase of 4.75%. This equates to a total of $12.82 for a family living in an average single family home.

Talking about tax increases is never fun. NOBODY gets into politics because they like to see people paying more money. I hate seeing taxes go up. But generally, I can accept a tax increase roughly equivalent to inflation: it’s pretty reasonable to expect the costs of receiving municipal services to go up at about the same rate as their other costs.

But this proposed increase hurts because it is more than inflation. So I look forward to Budget Deliberations. I know there will be strong discussions about service levels that residents might be willing to see lowered in order to find savings, and about non-tax revenue strategies we can consider employing. I’ll be surprised if Council doesn’t get this tax increase down slightly.

At the sametime, I also think it is important to look at the trend of tax increases, not just what is happening next year. Here is a look at what both taxes and inflation have looked like during my time on Council:

Even if this recommended 4.75% increase goes through, we will still be on trend to see taxes going up at half the rate of inflation. This is despite adding new services and having to absorb significant budget impacts imposed by other levels of government. I’m very proud of the work of Council and Administration which has made this possible. But, given the affordability challenges of so many these days, we need to keep working hard to find savings in the budget wherever practical.

Impact of Grande Prairie Police Service

Most people are interested in the Grande Prairie Police Service (GPPS): how it is going, and how it is impacting our budget.

The Transition is going well. There has been successful recruitment of Experienced Officers and the first Cadet class of new recruits is underway. Bylaw and Mobile Outreach have been well integrated and strong community partnerships are being built. We are well on our way to having an outstanding police service when the GPPS becomes the Police of Jurisdiction in 2026.

As for budget: there have not been any big cost surprises compared to the MNP Transition Study. The GPPS is costing us about what we expected it to cost us. However, the one big surprise: RCMP costs have risen quicker than anticipated. Which means that we are already seeing tax savings as a result of the transition.

In 2025, the City is budgeting to spend $21,960,000 in tax money on policing.

If we had maintained the RCMP status quo budget, according to the RCMP’s Multi Year Plan, we would’ve had to pay $23,330,000 in contract costs.

This means that in 2025, the GPPS transition is saving City taxpayers $1,370,000. If we weren’t making this change, we would’ve required an additional 1% tax increase to fund the status quo RCMP budget.

But where will we be in the long term? It is projected that when transition is complete in 2028, there will be annual savings of $1,630,000 as a result of the transition. And these savings are comparing a GPPS made up of 110 members to an RCMP detachment of 100 members. So the police transition is on track to be able to save money while putting more officers on the street.

If you want to dig into the GPPS Budget, you can find more information here.

Possible Adjustments

Administration has put forward some specific budget adjustments for Council to consider making. I assume all will get robust conversation.

Changes that would reduce the tax increase:

Adding Flex Firefighters and a Fire Admin Assistant: adding a few positions in the Fire Department will allow the City to access some grant revenue, find efficiencies, and reduce overtime. This is projected to save $161,000 on an annual basis.
Charging for fire response to vehicle fires and motor vehicle collisions: this is a practice that is common across the province but not in Grande Prairie. It is typically paid by insurance claims. It is projected to generate $148,000 in net revenue annually.
Increasing Interpretive Program costs: the base budget sets the cost recovery for Interpretive Programs (ex: preschool programs, summer camps, programming offered to schools) at 35%. Council could set this rate to 50% for $126,000 in increased revenue or 75% for $338,000 annually.
Charge for Business Licenses: Most midsize cities in Alberta charge business license fees of between $123 and $193. Grande Prairie doesn’t charge a fee to most businesses. Council could implement a $100 annual fee to generate $240,000 in annual revenue.
Paid Parking at Bonnetts Energy Centre: We could start charging people to pay in the East Parking lot (between Wendys and Crouses) while still leaving the West parking free. This would allow guests willing to pay easier access to more convenient parking and generate $54,000 in annual revenue.
City Events: Council could eliminate or reduce spending on one or more events. These would have savings ranging from $145,000 (for Canada Day) to $2000 (Halloween Spooktacular) per event cut or reduced.
Snow Clearing: Right now, residential snow clearing is triggered for every 10cm of accumulation. Council could increase this to 13cm, saving $250,000 on an average year. It could also change Transit Stop snow clearing from 48-hour service to 4 business days, saving $75,000.

In addition, there are a few changes Council is being asked to consider which would increase service levels, but with the impact of increasing taxes. These are:

Arterial Road Beautification: Invest $660,000 per year for three years to remediate and improve the appearance of boulevards adjacent to our busiest roads in town.
Transit Route Expansion: Invest more into Transit On Demand to fulfill more ride requests and expand a conventional Transit route into Copperwood. This would have an annual cost of $90,000.

Those are the big story lines I see heading into Budget 2025. But with hundreds of services being delivered, there are always a tonne of plates spinning whenever we talk budget. As we head into Deliberations, I’d love to hear any burning thoughts or questions you have.

Thanks for taking a read!

Dylan

Dylan BresseyNovember 12, 2024Comment