Elected officials seemed somewhat split on how to proceed with a three per cent tax increase previously approved in a three-year budget by the former council.
During a special meeting held March 28, administration presented council with an updated financial report, which included the following highlights: $5.6 million in reserves at the start of the year; a roughly $200,000 unexpected surplus that largely materialized as a result of staff turnover; and an anticipated increase in recreation and culture funding from Mountain View County.
Coun. Cheri Funke expressed a concern about including any additional funding from the county in the Town of Sundre’s 2018 budget since a new agreement is not yet in place .
“I don’t feel comfortable having it in our budget. They won’t be back paying us,” she told her colleagues and administration.
“Since we don’t know when we’ll have the agreement in place, I don’t believe it should be in our budget.”
Vic Pirie, director of finance and administration, said that certainly is a matter council could discuss, and proceeded to conclude his presentation.
“The budget that’s before you does anticipate a three per cent increase in the mill rate to both residential and commercial,” he said, welcoming questions.
Coun. Rob Wolfe wondered whether any Municipal Sustainability Initiative funding had been included in the budget.
Pirie said that while the provincial government had announced extended MSI funding for this year, which administration had anticipated, the program’s fate moving forward remains uncertain. Although the program is expected to end, the government remains committed to honouring the previous government’s pledges, he added.
“We would like to see what they’ll be doing in replacing the MSI program,” he said, adding that for the time being, the municipality has projected approximately $29,900 in funding from the province.
Coun. Todd Dalke touched on the point raised by Funke, and he agreed that council should reconsider whether to include the county’s anticipated funding increase in the budget until the recreation and culture agreement is actually in place — a process that could still take many months to complete.
“It’s maybe better to proactively plan not to get it than to have this fall over to next year,” he said.
Mayor Terry Leslie seemed to agree, and said that funding should not be counted on because there is uncertainty since the county does not plan to back pay once the agreement is finalized.
Coun. Richard Warnock took the conversation in another direction, and expressed concerns about maintaining the previously approved three per cent tax increase in the face of the roughly $200,000 surplus.
“I know that’s what was in the budget from the previous council,” he said.
While the councillor said he would prefer to see the increase cut in half, he was also wary about ending up having to pass an even bigger increase next year.
“Are you comfortable with this and that there is no realistic way to lower the three per cent?” he asked administration.
Pirie said the proposed budget was the best projection administration had available at this point in time. He reminded council the main reason there was a surplus from 2017 was a result of staff turnover, an unpredictable variable which cannot be depended on in planning future budgets.
“Just as I’m being told we shouldn’t count on money from Mountain View County, you shouldn’t count on money that may or may not be there in salaries,” he said.
Coun. Rob Wolfe wondered about a previous suggestion by Warnock to allocate a portion of the surplus to the tune of $60,000 to reduce the tax increase to 1.5 per cent.
However, Pirie advised against that option, and said the budget “doesn’t leave any room for reductions in mill rates, unless you wanted to use funds either from other sources, or look at reductions somewhere in the operations.”
The mayor said the municipality has a history of overestimating expenses and underestimating revenues, and as a result has shown a surplus every year for four years.
Additionally, substantial revenues have been allocated to reserves for future projects, and so Leslie took the position that administration should be directed to crunch a new budget that accounts for a 1.5 per cent tax increase, with any resulting shortfall being accommodated by the budget stabilization fund.
“That is how any accountant will make a budget — by underestimating revenues and overestimating expenses,” said Funke.
“We set this budget at three per cent. So I’m not quite sure why we’re discussing how to bring back a budget that’s already been passed at a different rate,” she said.
From major capital projects to fixing potholes, the municipality should be setting aside funds, “which I imagine that the taxpayers would appreciate more than 50 bucks off their taxes.”
Additionally, Pirie pointed out that the budget stabilization fund was not established for the purpose of lowering taxes.
“The financial stabilization reserve should be used for one-time unanticipated incidents,” such as, for example, covering flood expenses that cannot be recovered by the province.
“That’s the intent of the financial stabilization reserve — not to arbitrarily reduce taxes without a plan to find that money in the subsequent year,” he said, cautioning council that reducing the tax rate this year means not only conveying but also compounding the problem for the following year.
Dalke expressed confidence that administration had outlined a financial plan that accounts for savings that will be required to invest in the municipality over the coming years to ensure not only sustainability but also growth.
Dipping into reserves to lower taxes could create a misconception that council is saving too much, he said, adding that any changes to the tax rate moving forward should be a discussion for 2019 and subsequent years.
Before commenting further, Wolfe said he wanted to see a revised version of the budget that does not include the county’s contribution to have a better understanding of how that would impact the municipality’s bottom line.
Seeking clarification on council’s direction, Pirie wondered whether the budget revision should account for a reduction or elimination of projected county funding that remains uncertain.
The mayor said a breakdown of both options would be preferable, although Dalke said council should at this point err on the side of caution and not account for any county contributions in the absence of a final funding agreement.
The mill rate is expected to be set, along with the 2018 budget, before the end of April to allow administration sufficient time to prepare and mail out tax notices with ample opportunity for residents to meet the end-of-June deadline.
