OLDS — Town council has tentatively approved a five per cent property tax increase and a four per cent cost of living adjustment (COLA) for town staff.
A capital budget pegged at $7.7 million as of Nov. 29 was also tentatively approved with scaled back trail system work and a decision not to go ahead with revamped, year-round washrooms in Centennial Park..
Council made those decisions during a special budget meeting Nov.30. Those decisions will come up for ratification during council’s Dec. 12 regular meeting.
In the case of the tax increase and COLA, those decisions weren’t made easily. Council members deliberated the pros and cons of each for about half an hour.
The capital discussion took another two-and-a-half hours or so as council and administrative staff looked over each item that hadn’t been previously approved.
In the case of the tax hike, council looked at two options: a three per cent tax increase and a five per cent increase.
Debate was also largely held over whether the COLA should be set at four or five per cent, although one suggestion was made to set it at 3.5 per cent.
A document drawn up by administrative staff indicated that a three per cent tax increase would provide the town with $300,000 in tax revenue.
The town’s workforce would be reduced by 7.6 full-time equivalent positions and five would be added.
However, that option would force the town to pull $82,176 from its tax stabilization reserve. As of Nov. 30, the balance in that reserve stood at $295,107.
Council was told the second option, a five per cent tax increase, would result in $500,000 of revenue, resulting in a projected budget surplus of $117,294.
Council was told the five per cent hike would “negate” the need for the town to dip into the tax stabilization reserve.
In an email to the Albertan, chief administrative officer Brent Williams said if the proposed budget is ratified, the town’s overall staff complement would be decreased by 1.6 full-time equivalent positions despite plans to add an IT coordinator.
“Budget pressures are primarily driven by cost-increases beyond our control (fuel, energy, insurance, RCMP, etc.),” Williams wrote, echoing a comment during debate by Coun. Darren Wilson who said the only factor within the town’s control is really staffing and wages.
Coun. Heather Ryan offered a third option: a four per cent tax increase. However, that didn’t fly.
Finance director Sheena Linderman did some math and indicated that, allowing for the IT coordinator position, it would require a greater pull from the tax stabilization reserve than the three per cent increase option.
It was also noted that a market analysis is anticipated to identify where the town is competitively compared to others.
Several councillors, including Ryan, expressed a desire to compensate staff fairly after a couple of years with no COLA, yet ensure the town remains competitive with other communities when it comes to taxation.
Williams told councillors that from what he’s seen, COLA compensation provided in other communities ranges from 3.5 per cent to 5.9 per cent.
Coun. Darren Wilson said although he supported a four per cent COLA, he’d be willing to look at 3.5, noting he’s concerned about the town dipping into its tax stabilization reserve.
He also supported a three per cent tax increase, expressing concern about the need to make the community attractive for businesses to stay and move here, thereby supporting and growing the economy.
“I’m very concerned – cautious, conscious – of business tax being a tool to attract and retain business,” Wilson said.
On the other hand, coun. Harvey Walsh indicated he has no qualms about dipping into that reserve.
“The tax stabilization (fund), it’s there for a purpose. To not use it doesn’t make a lot of sense to me,” Walsh said.
“It’s there, you know. Probably this year as any year is better than any time to use that when the inflation is probably at a 30-year high.”
Walsh also said he’d like to see the COLA set “outside five per cent.”
Coun. James Cummings agreed with Walsh, estimating the current inflation rate in the province at about 6.5 per cent.
In regard to the proposed tax increase, Cummings said taxpayers need to know that what the town is talking about is an increase in tax revenue, not the tax rate.
He said the assessed value of property is rising in the town and that’s good news for residents who own property.
“As administration has clearly said here, in residential, a three per cent tax base increase will create a 6.2 (per cent) decrease in our tax rate,” Cummings said.
“That’s very important to know. I’m sure that when our citizens sit back and go, ‘well my home is more valuable, therefore I have actually made more money on my books here.”
As a result, Cummings liked the five per cent tax increase because he said, it would actually result in a decrease of 4.3 per cent on the residential tax rate and the town wouldn’t have to dip into the tax stabilization fund.
Coun. Wanda Blatz indicated she’d support a 4.5 to five per cent increase to the COLA.
Williams told council that under provincial legislation, municipalities cannot implement a residential/non-residential taxation rate higher than 5:1.
“Right now we are obviously at 1.5 to 1, so we are well under the legislated maximum,” he said.
Williams said compared with similar communities like Innisfail, Blackfalds, Edson, Hinton, Whitecourt or Taber “our tax rate is the lowest overall.”
“That doesn’t factor in assessments of course, because maybe property in Olds is more valuable than property in Morinville or Blackfalds. It’s hard to say right now,” he said.
Coun. Dan Daley liked the four per cent COLA option.
He also liked the five per cent tax rate increase because he said citizens have indicated they still want the same level of service they’ve had.
Daley said, due to inflation, the town will likely have to continue raising municipal taxes for some time “until we find a plateau.”
Otherwise, he indicated, at some point the town may be forced to hike taxes by a much larger amount and that could be even more painful for taxpayers.
After the voting was over, Coun. Wanda Blatz said a primary factor in her decision to support the five per cent tax hike was to cover the cost for the IT coordinator.
“I believe that’s a necessary position that we must add to our staff complement this year, due to all of the information we’re getting flooded with as far as, you know, cyber security and all of those types of situations,” she said.
Mayor Judy Dahl echoed that comment, saying council has discussed the need for that position “since we’ve been elected.”
