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Budget 2018 Deliberations: Days 1 and 2

Today Council finished its first two days of budget deliberations. We spent a lot of time getting basic information. We put some forward momentum into the next phases of Downtown. However, most of our decisions will get made tomorrow.

You can watch the budget deliberations by clicking here- we start at 9:00am.

Below is a summary of what has happened so far and some highlights of what we will touch tomorrow. My apologies for any errors or omissions. I tend to get someone to proofread posts before I make them. However, I do not have time: I want to get this out tonight so that you can see it before we go into deliberations tomorrow, and I have an event in 15 minutes.

Any errors, omissions, or opinions belong to me not to administration or the rest of Council.


Economic Update

Representatives from CIBC Wood Gundy and our Manager of Economic Development gave us some updates on the economy. Here were the most interesting factoids:

  • Year to Date rig starts in AB are at 142- this is up 86% from last year and a lot of it is in our region.
  • We are expected to have 66,000 people living in our City by year’s end. Our population tends to grow at 3x the national average. We gain people through natural means and from other provinces and countries. However, when you look at migration patters only within Alberta, we are a net loser.
  • Our median household income is 50% higher than the Alberta median. At the same time, our average cost of living is only 2% higher than Edmonton. We are an affordable place to live!
  • We have $3.7 billion of retail spending per year. $532 million of this is by people from outside of the City.
  • In 2017, private sector investment in the Montney is seeing a 158% increase in drilling budgets and a 73% increase in facility budgets
  • When the hospital opens, it will add an estimated 507 new jobs and $276 million GDP

We seem to be heading into some economically good times! Overall, this is exciting. But it will also carry some real challenges for the City to get ahead of.


Priority Based Budgeting

We received a presentation on Priority Based Budgeting. This is a new system that the City will be adopting next year. I am very excited for it! It will help us both quantify and improve our services while finding savings. It will also allow us to compare what we are spending on services with other cities’ costs.

The really quick view of how this works: Council sets strategic priorities. Every service in the City is given a score based on how well it adds to these objectives. For example, here are some strategic priorities a City might have. Every single one has objectives underneath it. A program is scored based on how many objectives it meets (different objectives can be weighed differently).

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Every service in the City also receives a very detailed cost breakdown. Below is an example of what this might look like.

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Once these exercises are accomplished, Council can see how much spending is being put towards high priority areas and how much is being put towards low priority areas. They can then make future decisions accordingly.


Scenario Budgeting

We were presented with a few budget scenarios which administration prepared.

We are on year four of a four year cycle. Over that time, some costs were added into the budget. We also went through a recession, so some revenues were not realized. To make the budgeted spending, the City would’ve had to raise taxes by 6% to make up $6.8 million dollars.

Administration knew this wasn’t an option. So they made a “base” budget which required a 4.2% tax increase to finance an extra $4.8 million dollars in spending. This base budget found savings by: assuming a 2.5% increase in fee revenue, adding a two-month wait period before recruiting when an employee moves on from the organisation, some personnel re-alignments, some changes to employee benefits, general efficiency, and other measures.

Administration then created a possible budget with a 3% tax increase (for $3.4 million in extra revenue) and a budget with a 0% tax increase. All of these budgets found internal savings- they do not touch the ~$5 million in support we give to external organisations.

Tomorrow Council will be looking at these scenarios and deciding on what tax rate we are comfortable with.

Administration has assured us that all three budgets (including the 0% increase) are realistic. They will provide all essential services and most quality-of-life services. That being said, all of them do come with some sacrifices. For example, check out the measures being taken in the Transportation department to get to each budget:

  • Transportation with a 4.2% increase (instead of the initial 6%): $350,000 reduction from the status quo. Only budgeting three snow removal passes on residential streets instead of the currently-budgeted five passes. This will not actually impact services- under our current removal policies, we typically only make three passes anyway. If we need to make extra passes due to higher than average snow fall, there is ample money in the Winter Stabilization Reserve. However, if we do have a couple years of high snow fall, we may need to increase taxes the next year to top up this reserve.
  • Transportation with a 3% increase: $665,000 reduction from the status quo. Reduction in servicing of gravel placed on our rural service area roads. Temporary positions lowered from 12 to 10. These lost positions will lead to less concrete and asphalt repair in the summer and to centre-of-the-street windrows being around for longer on priority 1 and 2 streets.
  • Transportation with a 0% increase:  $1,765,000 reduction from the status quo. Even less snow haulers in the winter, leading to priority 1 and 2 street windrows lasting even longer. Substantially less quality control oversight given to private contractors doing snow removal. Street sweepers reduced from four to three.

I will almost always go into Council discussions with an open mind. Tomorrow is no exception. But my thinking right now is:

In general, I support the 0% budget. However, one thing it includes: a $600,000 reduction to planned increases for the RCMP. With this money, we were planning to hire one traffic officer and three supervisors. I want to see these positions funded. I also have concerns about the Economic Development cuts being made in the 0% budget. I am hoping we can keep these and our tax increase well below 1.3% (which is this year’s Alberta inflation rate).

I know some of my colleagues are looking at drawing on reserves. In principal I do not object to this as many are higher than we need. We also just went through a few years of struggle for many people and this is the time to be giving them a break. So part of me wants to touch reserves now. At the same time, I know administration is working on an asset management inventory and strategy as well as priority based budgeting. Part of me wants to leave our reserves until those tasks are complete so we can maximize the funds drawn from them. I’ll be thinking about this a lot as I toss and turn tonight.


Downtown Rehabilitation

We had a long conversation on Downtown Rehabilitation. A motion was successfully passed. I don’t have the exact words, but its effect was:

To approve going ahead with Phase 3 (100 Ave from 100 St to 102 St) of the Downtown Rehabilitation project in 2018 subject to Council being satisfied with the contribution Aquatera commits to making. $125,000 is budgeted for communication strategies throughout this phase. The planned-for paving stone parking lanes will be asphalt instead, leading to a savings of $570,000 for this phase. Sidewalks will still be paving stone.

We discussed whether or not to approve Phase 4 at the same time so that it could be tendered with Phase 3. We decided NOT to do that but to have it in our deliberations for next year’s budget.

What is Next?

We have many decisions to make tomorrow. Here are the main ones:

  • Windrow Removal: Administration has found a method to remove all windrows using bobcats for a cost of $350,000. We are still waiting to hear details, but my understanding is that the proposed funding source is the Winter Stabilization Reserve. I don’t know how I will be voting yet. I want to see windrows gone. At the same time, I don’t support a tax increase at this time and I don’t like seeing these come from a reserve (reserve spending allows us to not raise taxes this year, but it also sets a service expectation which WILL require a tax increase next year)
  • Tax Increase: we will be deciding what if any tax increase we are comfortable with and directing administration to make a budget that reflects it. At the same time, we may direct them not to touch certain programs.
  • Public engagement strategy: I don’t know if any decisions will get made here, but we will have a vital conversation about it.
  • Community funding strategy: we will be discussing if we are comfortable with the ~$5 million we give to community groups being untouched. I do NOT support cutting this now, but I want us to take a good look at it over the year.

There is what we have discussed so far.

I have an evening full of events, so will not be interacting much online tonight. However, I will read any comments before showing up for deliberations tomorrow.