At the Dec. 6 council meeting Red Deer County council passed the 2017 budget that will see expenses exceed income by $5.7 million.
Because of a desire to maintain both the mill rate and service level the entire deficit will be funded by reserves or the county's saving account. This follows a deficit of $6 million in 2016 and projected shortfalls of $5.2 million in 2018 and $8.9 million in 2019. Over these four years council will consume 49 per cent of our reserves.
I must ask council what level of reserves they feel comfortable with. Historically, council has attempted to maintain reserves at a level near one year's operating budget, which appears to be about $45 million. Has this target changed, and if so why, and by how much? The 2019 projected total reserve will be under 60 per cent of the operating budget and general reserves will only be 40 per cent of operating.
It's commonly believed reserves are to be utilized to take advantage of opportunities in the marketplace or to fund unexpected incidents or disasters. In my opinion the current economic situation does not qualify on either of these fronts. While the economic situation might be tight, it is neither unexpected nor of disastrous proportions.
In the budget presentation council clearly stated a desire to not increase taxes while maintaining services and expenses, yet failed to explain the effect this has on reserves. It would seem more responsible to share the pain by having a small but responsible tax increase combined with reducing both the capital and operations budget. Combined, these measures would greatly reduce the claims made against reserves.
Council stated that in an environment of restraint there would be a salary freeze for both council and staff. Staff increases would be limited to one full-time position and several part-time or contract positions.
In 2016 there were reported to be 87 full-time positions, thus 88 in 2017. In 2007, a short 10 years ago, there were reported to be only 59 full-time positions. I realize the county is being requested to do more, but my question is how much more, how much is essential services and how much is only “nice to have.”
I urge council to show true restraint, reduce budgets, approve a moderate tax increase and reduce the draw on reserves. You are placing future councils in a precarious position.
Dave Hoar is a county resident and former councillor and can be contacted at [email protected]
