OLDS — Residents will probably be faced with some sort of tax increase as the town grapples with major infrastructure and other costs that can’t be postponed any longer, councillors say.
The question is how big that hike will be?
On Monday, Nov. 27, council is expected to be presented with some options which could include solely increasing taxes or some combination of a tax increase and dipping into reserves to cut the size of that hike.
Council is expected to hammer out its final version of the budget when it meets on Dec. 11.
However, the exact tax bills property owners will be hit with won’t be known until next spring after property assessments and education taxes have been finalized.
The 2024 draft base operating budget pegged expenses at $32,853,413 and revenues at $32,977,333, resulting in a $123,920 surplus.
Council held a second special meeting on Nov. 22 to try to whittle down its projects budget.
But after several hours of presentations by staff and questions from councillors, only one item was cut, shaving the total cost of projects from $1,083,199 to $1,033,199.
The rest of the projects, including a $1.5 million one to attack water loss, known as I & I (inflow and infiltration) remained.
Aggravating factors in those costs include inflation and crumbling infrastructure that administrative staff indicated likely should have been dealt with years ago. That neglect is now coming home to roost.
Director of corporate services Sheena Linderman told council that water loss figure is projected to total $2.3 million this year.
“When you take into account the surplus, $123,920, we are at $910,000 deficit,” Linderman said.
Chief administrative officer Brent Williams told council that two items alone in the base budget -- anticipated carbon tax increases and increases in RCMP costs -- are “three-plus per cent of our taxation requirements, just this year going up” and the town has no say in them. They’ve got to be paid.
All those factors led council to look at the options outlined above.
“The projects are suitable enough to fund through reserves if you wanted to minimize that taxation impact,” Williams said.
“Of course, you are just robbing Peter to pay Paul, pushing things down the road, but council has other things to think about in the short-term versus next year, winter.”
Several councillors said while they don’t like the idea of dipping into reserves much they’re also aware of the impact a major tax increase could have on residents who are already under stress, due to inflation and high interest rates.
Coun. James Cummings said municipalities have been underfunded for so long that “we’re at this crisis stage here where we’re looking at the proposed budget and we’ve managed to cut one (project).
“All of these are absolutely necessary for the functionality of our town and with reducing as much as we can, laying off staff, terminating positions, we still are looking at a massive tax increase.”
Cummings said according to a comparison of similar communities in Alberta provided by administrative staff, Olds is “relatively low-taxed.”
“I’m pretty sure most of the citizens in our community are aware of our financial struggles, especially with regard to water and our sewer system and how much money is going down literally the drain,” Cummings said.
“So I don’t believe we can pare this budget down any more than it is. I’d be happy to hear from anybody who thinks we can and has some solutions to solving these problems.”
Cummings didn’t like the idea of dipping into reserves unless absolutely necessary because he said that money needs to be in place for emergencies that always seem to crop up.
Coun. Heather Ryan agreed with Cummings’ comments in general. She said she was “flabbergasted and appalled” by infrastructure work that wasn’t done or repairs that weren’t done sufficiently.
“There's no fluff here, is what I’m trying to say. There’s no fluff here. This is all really needed items – simple as that,” she said.
However, Ryan also said the town has a tax reserve just for situations like this and was told it currently has about $300,000 in it.
What's more, she said it gets replenished every year, so if the town dips into it to soften the tax hike blow, that dip will be covered in time.
“This is a time when we need to have these things replaced and repaired, not just for the safety of our residents, but going forward and maintaining what we have. I mean, we can’t continue to allow these things to deteriorate,” she said.
Coun. Darren Wilson called the Nov. 22 budget document “a shock and awe budget I never wanted to see.”
But he agreed with Cummings and Ryan that all the projects remaining need to be done.
“It’s just, yeah, not a pleasant story to tell residents, regardless of whether we continue to maintain one of the lowest tax rates amongst municipalities or not,” he said.
“This is going to hurt, there’s no doubt about it. And I agree, the budget is as slim as it can be. There isn’t a lot of excessive fluff or diamonds and jewelry.
“But this is going to be a tough financial hit for a number of families in this town.”
Coun. Wanda Blatz echoed the comments of the others. She asked Williams if there’s any chance the province might provide more money to relieve the financial on the town.
“Unfortunately not,” Williams said.
