A Sundre councillor urged his colleagues last week to reconsider a previously approved one per cent increase to the Fortis franchise fee.
Coun. Myron Thompson attempted to convince council that the fee should remain at the 2017 rate of eight per cent. He argued that families struggling financially have in some instances found themselves forced to relocate to other communities with lower taxes.
However, the increase had already been discussed and included in initial 2018 budget planning, meaning that retaining last year's rate would result in a shortfall, pointed out Vic Pirie, director of finance and administration.
Every year, council has the opportunity to decide whether to apply a franchise fee of up to no more than 20 per cent to the power bills that residents receive, he said, providing background.
"It shows up as municipal rider on their bill. Last year, you set the franchise fee at eight per cent," he told council, which had already during a previous preliminary 2018 budget discussion approved the increase to nine per cent, of which six per cent is to be allocated to offset taxes while the remaining three per cent goes to infrastructure reserves for future capital projects.
Therefore administration recommended a motion to that effect to reflect what the 2018 budget was already pre-approved for, he said.
But while Thompson expressed enthusiasm for the decision council made last year to break down the eight per cent franchise fee to help offset taxes as well as build up reserves, he reminded council other municipalities in the region have imposed lower to no tax increase for their residents. So he motioned to maintain the franchise fee at the 2017 rate.
As a point of clarification in response to questions received from residents, Coun. Cheri Funke wanted to know how the funds raised by the fee come back to the municipality.
The town receives on a monthly basis the revenue generated through the rider, answered Pirie, adding the amount residents see on their bill depends on the level of consumption.
Mayor Terry Leslie said council has taken great strides towards growing reserves ó up to roughly $5 million from $3 million ó and wanted to know whether infrastructure reserve funds generated by the franchise fee are set aside for specific projects.
Funding generated by the fee is allocated into reserves as a specific account and will be utilized throughout the capital budget process, said Pirie.
"As we bring forward the revised new five-year capital planning, you'll see additional projects being funded through the Fortis franchise fee," he said, adding one possibility could be to offset the temporary cost of deploying municipally-owned broadband Internet should the incoming council choose to proceed.
Coun. Paul Taylor was not opposed to Thompson's motion, but nevertheless expressed concerns.
"If we don't reserve it, it's going to slap us in the faces with taxes," he said.
The roughly $19,000 in forgone revenue for 2018 represented by Thompson's motion might not "necessarily help a whole lot or necessarily hurt a whole lot. However, we did vote the nine per cent to some extent when we approved the budget."
Coun. Chris Vardas argued against the motion, saying residents would end up paying one way or another in the end. Additionally, there are many important and impending capital projects to save up for, and council should avoid creating any shortfalls, he said.
Thompson made the case that council's duty is to listen to concerns of families such as those who have made the difficult choice to leave Sundre, and suggested finding ways to do more with less in the budget to reduce the tax burden.
"I'm not in favour of saying, ëWe're going to take more money from you folks.' Even one per cent for a franchise fee, which I think is wrongheaded at this time," he said, referring to the sluggish economy.
However, the franchise fee is not technically a tax and is actually a method to help reduce the municipality's fixed tax rate, said Funke.
"Yes, they pay it through their electricity bill. But it's usage based ó if they want to pay less, they use less. I follow my children everywhere they go in my house and make them turn the lights off and use the electricity less because it is expensive," she said.
Additionally, Vardas said Sundre's tax rate cannot be compared with higher population centres such as Olds and Carstairs. Setting aside money for infrastructure today will help to maintain and build amenities to grow the population, which will create a larger, more diverse tax base for tomorrow.
Following further discussion, Thompson said before council voted on his motion, which was narrowly defeated, that he worried about taking more from residents than needed.
Funke went on to motion approving the one per cent increase.
"I felt comfortable when we made the decision when we passed the budget, and I continue to feel comfortable with the decision."
Her motion carried.
