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Day 3 of Budget Deliberations

Yesterday Council completed budget deliberations.

I am very excited about the budget as it stands right now. It increases investment in policing, roads, and accessibility. It funds next steps at the Leisure Centre and for Hillside Renewal. At the same time, it incorporates a tax decrease.

I’ll be making a shorter post on my blog with the most important highlights later today. Following is a detailed report on Day 3 of our deliberations.

All mistakes, opinions, and poor grammar below belong to me and me alone, not to Council or City staff.

Worth noting: in 2018, $1,170,000 in spending was equivalent to a 1% property tax increase or decrease.

Also worth noting: no decisions are final yet. The budget created for this process will need to be ratified at a normal Council meeting. Additionally, we do not pass a tax bylaw until the spring- the target tax amount is subject to change until then.


Breaking Down the Tax Decrease

Currently the budget sits at a -4.1% decrease. This means that an average property will have 4.1% less taxes in 2019 it did in 2018. For an average home owner this is a decrease of ~$130.

This is a decrease to the actual amount that people will pay, not to the mill rate. After 2018 assessments are completed, the mill rates will be created to incorporate this decrease. This means that even if your property value goes up, you will see a tax decrease as long as it went up at the same rate as average properties in its class in Grande Prairie went up.

Some may point out that this decrease is due in part to re-financing loans and increasing revenue. That is true. Refinancing has an impact of ~1.5%, increasing the Electric Franchise Fees has an impact of ~1.3%, and the proposed Fees and Charges Review has an impact of ~0.2%. This means that without counting these measures, a tax rate decrease of -1.1% was achieved.

The City is achieving a tax decrease just from controlling its expenses. This is despite many service improvements built into the budget and all the upward cost pressures described here.

The decrease is a testament to the incredibly hard and dedicated work our staff have put into implementing Continuous Improvement and Priority Based Budgetting. This budget has been achieved partly because Council showed disciplined spending. But mostly it is possible because over the past year City staff were working very hard throughout the day and often putting in evenings and weekends to set the City up for success. I am so very thankful for them.


Infrastructure & Sustainability Package

We began the day with a presentation on how the budget addresses infrastructure and sustainability. Highlights of the 2019 budget as proposed by management:

  • Bypass: $500,000 set aside for assessment and minor rehab after we take ownership. Since we likely will not receive this road until July, we will not have time to do any major repairs in 2019. However, over $12,000,000 is designated over the four year budget.

  • Asphalt Repair: $225,000 designated to purchase asphalt repair equipment. This equipment will allow us to use hot patches for winter pothole repair. These are much more durable than the cold patches previously used.

  • Railway Crossing Upgrades: $500,000 is set aside for federally mandated upgrades to railway crossings. These do not help with anti-whistling. To stop train whistles, $2.5 million is needed for crossing upgrades plus fencing. We are still determining how much fencing would be required to stop whistling (Airdrie was recently required to fence the entire length of track within their City to stop whistles). There are no plans for anti-whistling measures in the current budget.

  • Avondale Planning: $100,000 is set aside to fund an Area Redevelopment Plan in Avondale. This is necessary as the Composite High School is moving and the City will likely be doing something with the Leisure Centre.

  • Windrows: last year’s windrow removal was a one-year pilot project funded out of reserves. It is now a permanent program resourced through operational funding.

After this presentation, a number of motions were made. The highlights:

  • Pedestrian bridge linking Maskwôtêh Park and the new hospital. A motion was made to de-fund this project. I opposed this motion. It is good for patients to be able to easily access the playground and the Muskoseepi trail system. More importantly, the hospital and surrounding area is going to become a very important part of our city- it needs to have good active transportation connections. This motion failed, meaning that this project is still planned.

  • Hillside Area Redevelopment Plan (ARP). There was funding planned in 2021 and 2022 to undertake action items previously identified for Hillside. These include trees, paths, and an entrance feature. A motion was made to move funding up to 2019 and 2020. I supported this motion and it passed. Residents in this area were promised investment by the City when the ARP was developed last year. I did not want to see us waiting another two years to follow through.


Organisational Efficiency

Next we heard how organisational efficiency is being addressed in the budget cycle. Highlights include:

  • Online Presence: A new website and online engagement tool will be rolled out in early 2019.

  • Continuous Improvement and Customer Service: The City is heading into year 2 of Continuous Improvement programs to increase efficiency. A program to encourage and resource better customer service is just getting underway.

  • Restructuring of Corporate Services: Procurement, financial systems, facility management and IT have been centralized instead of handled department-by-department. This allows for increased efficiency across the organisation. It also ensures that departments are being given more over site and support by the corporation.

  • Procurement: this department is a year into new management and has undergone significant changes to its practices. Highlights include:

    • The use of negotiated RFPs for some projects. These allow us to put our emphasis on selecting the right vendor then attain a fair price rather than putting emphasis on getting the lowest bidder

    • Beginnings of social procurement whereby the community impact of purchases becomes an important consideration in scoring bids

    • Focus on maintaining records of success with vendors and contractors so that past performance can influence future awarding of projects

    • Streamlining of the tendering process to make City bids cheaper and easier for contractors to pursue (which in turn increases competition for City projects)

After this presentation, a few motions were made. The highlights:

  • IT Services: There was a long conversation about the IT budget- some Councillors felt it is too large. A motion was made to de-fund proposed IT Capital Projects. I opposed this motion. However, another motion was made to have Council do a thorough review of IT in early 2019. This motion passed with my support. This department has a significant budget and it is also critical to our organisational success. I want to make sure the money in IT is spent both efficiently and effectively. At the same time, it is a technical department that Council has never received detailed information about. Council gaining more knowledge and giving input is appropriate. But any decisions made in the midst of this meeting would’ve been under-informed and had potential for unintended consequences across the organisation.

  • Accessibility of City Facilities: An assessment of all City facility’s accessibility for people with mobility challenges was recently completed. A motion was made to fund $50,000 per year to address deficiencies identified. I supported this motion. Having civic facilities accessible to all people is something I value deeply. I don’t know if $50,000/year is enough to invest, but it is a good start.


Community Enhancement

The final package Council heard had to do with Community Enhancement. There were a number of projects in the budget proposed to enhance facilities including Eastlink Centre, Revolution Place, and South Bear Creek Park. However, the most exciting thing I heard here was management’s approach to some projects, including improvements to the off-leash dog area in South Bear. For this project management is only asking for 50% of the funds needed. It has committed to raising the rest through corporate sponsorship. I love to see management actively pursuing revenue sources besides taxes.

A few significant motions were made in this area. The highlights:

  • Community Group Funding. A motion was made to reduce the funding given to community groups by $500,000. I opposed this motion and it failed. This funding pool will remain at its 2018 level of ~$4,294,000. Council will meet in December to finalize allocations. Funding community groups is important- by leveraging volunteers and donations, many deliver vital community services much more efficiently than government ever could. At the same time, we need to take a hard look at our funding level and methods to make sure we are investing appropriately and getting maximum impact with these dollars. Management has committed to lead a review of community group funding in 2019. I may be supportive of changing funding at that time. But any changes should be made strategically and with lots of notice to groups, not suddenly with minimal discussion close to the beginning of the next fiscal year.

  • Eastlink Centre Pool Accessibility: Currently, people with mobility challenges need to take a very long, indirect route to get from the change rooms to the 25m pool at the Eastlink Centre. Many of them use this pool daily for therapy. There was a motion to designate $30,000 to install a ramp that will allow them to take a direct route to the pool. I supported this motion and it passed. I am excited to see a significant barrier to accessibility removed.

  • Pickleball: Currently pickleball is being played on the Muskoseepi Park tennis courts. These are challenging because they are often full and they were not designed for this sport. Over a year ago the club approached the City for help in creating a dedicated court. At the time, they had committed Gifts-in-Kind, but they are not sure if they can still secure these due to how long this process has taken. A motion was made to fund constructions costs of $258,000 for pickleball courts at the old tennis courts near Dave Barr. I supported this motion and it was defeated. Another motion was made to fund 75% of their cost. I also supported this motion, but it was defeated, too. Right now there are no plans for pickleball. Other Councilors expressed a need for regional funding to be a part of projects like this going forward. I agree with this sentiment, and I am glad that a Regional Recreational Committee is currently working on how this can be accomplished in the future. But this committee isn’t funding projects yet and I don’t know if or when it will do so. I didn’t think it was fair to give the pickleball club a very uncertain future attached to this committee.


Downtown

Rehabilitation

Near the end of the day, Council discussed Phase 4 of Downtown Rehabilitation. Any significant work done in 2019 would need to be funded through the City borrowing money.

Council heard about the condition of the pipes underground in this phase.

The sanitary lines need to be relined in the near future, but this would be funded by Aquatera (not through City borrowing) and would not require the entire road to be dug up. I’m waiting to learn more about the cost and impact of this.

Otherwise, all pipes (water, sanitary, and storm) still have plenty of serviceable life in them. They also have enough capacity for all development which is currently announced or proposed. Unless several significant new building projects are initiated in the east end of downtown, these pipes likely will not need replacement for decades. There was no motion made to go ahead with Phase 4 of Downtown Rehabilitation in 2019.

A motion was made to designate $3,000,000 towards surface improvements on 100 Ave between 100 St and 99 St. This would’ve seen this block made to look the same as the new work just completed on 100 Ave, but would not have improved any plumbing. It would’ve required 2-3 months of road and closure and partial sidewalk closures. I voted against this motion and it was defeated. It would be nice to have these blocks match, but in my opinion the cost was not worth it. $3,000,000 is a lot for the City to spend to make one block look good. I also had a few business owners tell me that significant closures in 2019 would likely put them under. This cost to the City and businesses is too much for work that will need to be re-done when the pipes are eventually replaced.

At the end of this discussion, administration was tasked with coming back to Council with other options to increase the aesthetics of 100 Ave east of 100 St. Council wants to look at lower cost items that will not go to waste when this road is dug up in the future. Ideas included new light poles and semi-permanent flower planters. I look forward to seeing these options and am likely to be supportive of some- I do believe investing in the aesthetics of downtown is worthwhile, but investments need to be moderate and wise.

Incentive Programs

The City has a series Downtown Incentive Grants which had run out of funding. They can be found here.

A motion was made to provide $250,000 of funding towards these grants. An amendment to the motion excluded the Facade Improvement Program from additional funding. I supported the motion as amended and it passed.

The remaining grants directly encourage development downtown. If this happens, the City will be able to generate increased property taxes from the area. Additionally, one of the most frequent requests I receive from residents is for the City to “do something” about certain vacant properties downtown. Provincial legislation does not provide the City any tools to compel action. Other than providing adequate water service for new development (which happened in earlier phases of the Downtown Rehabilitation), assistance with demolition and incentives for residential development are the best tools the City has to encourage redevelopment. These grants can help the City make money in the long-term and contribute toward a significant community priority.


Debt Refinancing

The final discussion Council undertook had to do with debt refinancing.

The City carries debt on a number of facilities which has shorter repayment terms than the facilities have usable life. Some feel that this is unfair to today’s taxpayers as they are making higher payments than they need to while future taxpayers will get to use the facilities without paying anything for construction.

A proposal was made to refinance this debt to have a longer term. This would lead to lower annual payments for 11 years. However, re-financing requires an upfront stop loss payment. Additionally, due to its longer term, more overall interest would be paid on the debt.

A motion was successfully passed to re-finance some debt, but not all the loans originally proposed. It directed the refinancing of all loans expiring after 2026 and with an interest rate above 3.5%. These loans are on the Third Fire Hall, City Service Centre, Mother Teresa Community Gym, Montrose Cultural Centre, and the Eastlink Centre. They will be refinanced into a single loan with a life of 30 years and an interest rate of ~3.5%. This will give the City an increased cash flow of ~$3,300,000/year for five years, and slightly less for the following six years.

I opposed this motion. The City faces significant financial risks over the next few years. These include the potential cessation of MSI grants from the province, the inheritance of the bypass, and the opening of a new hospital which will have significant infrastructure impact. At the same time, Council has adopted an aggressive budget which has decreased room to respond to changes.

There are two major tools the City has to respond to risks: borrowing and reserve funds. This refinancing proposal sees us decreasing our borrowing ability over the next 30 years. And we are spending half of our Financial Stabilization Reserve to do it. Refinancing significantly increases our risk.

This risk exposure may be worthwhile. But Council hasn’t given it due consideration yet. We need to have a more comprehensive conversation about our approach to debt and reserves and about our tolerance for risk. And if we are going to increase our exposure to risk, we need to have a concrete objective to pursue with the cash flow this exposure frees up.

Another motion was successfully passed to designate half of the increased cashflow to the Financial Stabilization Reserve and half to a tax decrease of ~1.5%.

I also opposed this motion. Current Council policy states that the Financial Stabilization Reserve should have 10% of our annual operating budget in it. After the stop loss payment is funded, it will go from ~4% to ~2% of our annual budget- at the very least I’d like all saved money to be directed to this reserve until the stop loss is paid back. And while I appreciate the importance of a tax break, this is a temporary one that comes with increased risk and increased interest payments in the long-term. I have not yet been convinced that this particular tax break is worth the cost of re-financing.

Worth noting: Council needs to pass a Borrowing Bylaw for this strategy to take effect. This means that it will get debated at least two more times over the next couple of months. One of these debates will include a public hearing where anyone can share their views. I’ll be posting more information as these dates get set.


That’s our budget as it sits right now. It may get some revisions before a final rate is set in the spring, but I expect it to remain substantially the same.

Later today I’ll be making a much shorter post with the most important facts you should know about budget.

Thanks for reading! I look forward to hearing your thoughts.

-Dylan