Council came to an impasse by a single vote last week when attempting to reach a consensus on setting this year’s tax rate.
After recently adopting the municipality’s first-ever four-year budget, administration recommended approving a 2.25 per cent increase to the tax rate during the April 15 meeting .
“The sooner that this is passed, the sooner we can get the tax bills out,” said Chris Albert, director of corporate services, adding that would give residents “ample time to get the payments in before the June 30 deadline.”
The tax rate bylaw, explained Albert, is based on the budget that was adopted in March. The budget forecast about $8.7 million in expenditures with some $5.1 million in operational revenues, leaving more than $3 million to be collected through taxation to cover operating expenditures, he said.
For the coming year, the four-year budget anticipated a cost increase percentage of about 3.3 per cent over the previous year’s budget, while the Bank of Canada calculated the inflation rate for the past year, from October to October, to be about 2.8 per cent, he said.
“So we have managed to do, as far as I’m concerned, some pretty good work in staying under inflation and under that cost projection,” he said.
“And really, that comes down to increased assessments, which is one of the things that I highlighted during the budget process, is that the cost increase for the budget does not necessarily match exactly with a mill rate increase.”
Meanwhile, the non-residential rate has been maintained at 1.5 times over the residential rate. The school requisition rate remains uncertain, he said.
“No provincial budget has been passed, therefore we have not gotten the 2019 requisition,” he said, adding administration is allowed to estimate what that number will be.
“I came up with a ballpark three per cent increase,” he said, adding that based on previous years, the school requisition tends to come in a little over the inflation rate.
Albert also pointed out to council that a 0.5 per cent reduction to the proposed 2.25 per cent tax rate increase would equate to approximately $16,800 that would need to be saved elsewhere in the budget to compensate for a lower rate.
Coun. Cheri Funke motioned the bylaw’s first reading, which carried unanimously. She also made a motion for second reading, initiating a discussion.
Coun. Paul Isaac said he would support a 1.25 per cent tax increase, one per cent lower than administration’s recommendation, which would represent a budget shortfall of more than $33,000.
“Our economy hasn’t turned around,” said Isaac, who sought to alleviate the burden on businesses.
Mayor Terry Leslie supported a reduction in the suggested tax increase as well. While the mayor expressed appreciation for administration’s effort in reducing the proposed tax rate increase, he encouraged council to direct staff to further sharpen their pencils and find more efficiencies.
“We can do better,” he said.
“I would support something under two per cent.”
The mayor expressed confidence that administration could tighten the municipality’s fiscal belt by either $16,800 or $33,600 to help Sundre remain more economically viable for struggling businesses while perhaps also enticing new enterprises to come to town.
Funke said council had previously directed administration to come back with a 2.8 per cent increase.
“They did better than that. They did their due diligence, they went in and cut what they could, and they came back with the 2.25 — very much lower than what we as council directed them to do,” said Funke.
She added that the average household’s annual increase of roughly $68 is not what would prevent homeowners from paying their taxes.
“If we roll it back too far, we still have to make up for that money. So next year, we’re going to have to make up for the money that we do not charge this year,” she said.
Instead of helping taxpayers, she said reducing the tax rate will merely result in compounding the cost down the line and place an even bigger burden on businesses and residents later.
“We have a lot of unforeseen costs that we don’t know the true costs on that are going to come in our very near future,” she said.
Coun. Todd Dalke said costs are going up every year with residents taking “the brunt of it.”
Dalke was not opposed to rolling back the proposed tax increase a bit as long as service levels are maintained. He suggested meeting in the middle with 1.75 per cent instead of Isaac’s suggestion of 1.25 per cent.
Coun. Rob Wolfe said he was all for keeping taxes as low as possible, but pointed out that many residents are not satisfied with current service levels and wondered how they could be reduced even more. While Wolfe said he was amenable to a 1.75 per cent increase, he could not support 1.25 per cent.
Isaac said he understood that reducing the tax rate too much now would be self-defeating in the long term. He said he could support a five per cent tax increase for the sake of sustainability, but argued residents and businesses would be unable to absorb such a hike. More should be done, he said, to bring in new businesses to grow a larger tax base.
Coun. Charlene Preston did not support the 1.25 per cent increase, and like several of her colleagues suggested finding a compromise closer to the middle.
“This is going to come down to level of service,” said Preston.
“This also needs to come from the public and what their expectations are.”
Asked for his opinion, Albert said the only way to make up for a budget shortfall created by a reduction in the proposed tax rate would be by either reducing the levels of service hoping unexpected savings materialize elsewhere throughout the coming year, or tapping into reserves.
“I don’t think that’s a very good budgeting process,” he said.
The motion on the floor to approve the 2.25 per cent increase was amended by Wolfe, who suggested a 1.75 per cent increase. Isaac, Wolfe and Leslie voted in favour, while Preston, Dalke and Funke were opposed, defeating the motion on a tie vote. Coun. Richard Warnock was not present for the meeting.
Asked for her thoughts, Linda Nelson, chief administrative officer, felt lowering the recommended 2.25 per cent increase to two per cent would be more manageable.
Dalke made a motion to that effect, which carried. However, the bylaw’s third reading, which has to carry unanimously, stalled when Isaac voted against the motion.
Council ended up setting a special meeting for Tuesday, April 23 at 5:30 p.m. to conclude the matter.
