SUNDRE – Council faced a full chamber last week during the regular Dec. 4 meeting when the municipality’s four-year operating budget and 10-year capital plan – which will have tax implications next spring – were passed.
While there were several representatives from three delegations that were on the agenda for presentations to council, more than a dozen residents also attended.
“There have been a number of posts on social media which seem to indicate a lack of understanding of the budget and the tax implications that go along with it,” said Chris Albert, director of corporate services, when the matter of the budget came up two hours into the meeting.
“From what I saw, the statements on social media were very incorrect.”
Albert explained the difference between a cost increase and a tax rate increase.
“A cost increase percentage is not completely indicative of tax rate increase, pending unknown factors such as additional revenue sources, cost-sharing alternatives and increased new development. Administration believes approving cost increases separate from tax rate determinations is a prudent approach to financial stability and transparency,” he said.
Administration presented a budget that factors in incremental changes now to minimize more pain in the future, he said.
“As we all know, we have lots of aging infrastructure,” he said, citing a recent engineers’ report that helped establish priorities.
“The big thing is 2nd Avenue northwest,” he said about the road in front of the schools, arena, curling rink and rodeo grounds that was identified as high-priority by the engineers.
“It’s not the highest – I’ll get to that in a minute – but it is a very high-priority project,” he said, adding there was a “significant leak” there earlier this year that was resolved with a temporary fix that requires a more permanent solution.
That project, scheduled for 2024, is expected to cost about $2 million, he said, adding just more than half will come from Municipal Sustainability Initiative funding while the rest will be drawn from restricted surpluses.
“For that particular project, we do not have to do debenture borrowing,” he said.
In 2025, among the top priorities is the Centre Street North project, which is broken down into two sections: from the traffic lights at the intersection with the Main Avenue-Highway 27 corridor to the Bearberry Creek Bridge, and from north of the bridge to just past the Joko Convenience Store. Each section is expected to require borrowings of about $1 million, he said.
Although the Centre Street project was technically identified by the engineers as being higher priority than 2nd Avenue NW, Albert said that through discussions with council, the decision ultimately was made to proceed with that project in 2025.
“With the (Main Avenue-Highway 27 corridor) construction that’s kind of paused for winter but will be going on into 2024, administration in discussions with council, don’t believe that 2024 is best time to try and do that construction,” he said, later adding that 5th Avenue NE was also identified by the engineers among top priorities as another multi-million-dollar project to be covered through reserves, grants and debenture borrowing.
“The engineers identified a lot of projects that need to be done,” he said, adding they don’t all have to be done immediately, but that the longer the delay, the more urgent they become.
After presenting the detailed recap of anticipated capital projects too numerous to mention here, Albert also wanted to highlight the operational budget’s variance between 2023 and the forecast for 2024.
“When we presented this (four-year budget) last December, the anticipation was that we were going to require an additional $100,000 (in 2024),” he said.
“We went from a $100,000 potential increase, to a $50,000 decrease,” he added.
And while other savings were inadvertently realized in other areas such as staff vacancies, Albert pointed to the new police funding formula imposed on small municipalities by the provincial government – a substantial cost set to increase to $170,000 in 2024 from $115,000 in 2023.
“There’s a $55,000 increase that is coming from the province,” he said.
The municipality must also be mindful of setting aside money that will eventually be required to replace existing assets, he said.
“We need to be accumulating approximately $2.4 million per year in order to replace the assets that we currently have over whatever their lifespan is,” he said.
Additionally, he said the dollar amount estimated to be collected from taxes in the updated 2024 budget compared with what had been approved last December, represented a difference of roughly $43,000.
So while there is an approximately 11.03 per cent increase in cash requirements, property taxes are expected to go up by about 5.6 per cent, followed by about a five per cent increase in 2025 and 3.81 per cent in 2026, he said.
“To put 2024 into context, the last two years, other municipalities in our general area have increased the costs they bill to taxpayers by approximately three times what we have done,” he said, adding some municipalities have increased costs on taxpayers by almost 10 per cent over the past two years.
“We’ve done – in the last two years – about 2.5 per cent,” he said, adding projections for 2025 and 2026 are of course preliminary and could change.
In 2024, a property owner with a home valued at $350,000 would depending on changes to their assessment see their tax bill increase by roughly $12 a month, he said.
Following Albert’s presentation, members of council offered their perspectives.
Coun. Paul Isaac pointed out council endeavoured throughout the pandemic to keep tax increases minimal, despite being cautioned by administration there would eventually be a need to catch up. Compounding the already-challenging situation was the engineering report that identified nearly $30 million to repair or replace underground infrastructure over the coming years.
That cost might be a difficult pill to swallow, but the municipality can afford even less not to replace aging infrastructure, said Isaac.
The mayor asked Albert what impact there would be on the budget’s potential tax increase requirement should council choose to reduce the amount allocated to restricted surplus accounts.
“The simplified answer is that it really just pushes that requirement out and decreases the potential (tax) increase this year; but at some point in time, it does get needed,” said Albert.
Warnock said he felt the public also needed to be aware of the provincial government’s police funding model that was imposed onto smaller municipalities, who have no choice but to pay.
“We had tried to absorb those costs,” he said, adding the annual increases became too large.
Further complicating matters for small municipalities was another provincial government decision to substantially slash back funding previously granted for capital projects. Once receiving $420 per capita for such projects, that amount by 2023 dropped to $150.
“They did top-load it in 2022 and gave us some extra money,” said Warnock, adding that had gone from $420 to $220, or about about $200 per person less.
Prior to that major clawback brought about by the provincial government, smaller municipalities could much more flexibly tackle capital projects within their existing tax base without further requiring tax revenue or debenture borrowing.
Additionally, the mayor said that as a member of council for six years, he’d endeavoured to encourage administration to keep tax increases at a minimum, with some years even managing to hold the line at a zero per cent increase.
Having reviewed his own tax bill since first being elected as a councillor in 2016, he said, “I’m paying 4.75 per cent more municipal taxes – the Town of Sundre’s portion – now than I was in 2017,” or annual increase of 0.67 per cent.
The overall tax rate charged by the municipality includes additional requisitions beyond council’s ability to influence or control, such as education.
“After the next three to four years, we should not have those drastic changes again,” said Coun. Todd Dalke, expressing a reluctance to further claw back any dollars allocated for surplus accounts.
“We will need those going forward, and it will hurt our residents far greater if we pull it back.”
Calling the engineer’s report a “game changer,” Coun. Jaime Marr reminded those attending that elected officials are responsible for ensuring the safety of their citizens, which includes providing functional services.
“I would much rather be the council member that increased your taxes, than caused a section of town to not be able to function or a section of businesses to not be able to run” as result of infrastructure failures, said Marr.
“This is hard stuff,” she added.
Seeking a motion, the mayor asked if anyone on council was prepared to move forward, and Coun. Owen Petersen motioned to approve the budget as presented.
“I don’t think I struggled with this budget quite as much as some are struggling with it. This budget is about maintaining and improving what we have,” he said.
“There’s a really easy way out of this increase, and that’s to not put anything in our savings account and make this next council’s problem, which I’m unwilling to do.”
Elaborating, Petersen said the budget wasn’t about splurging on lavish new things but rather repairing roads and pipes while still maintaining operational costs across the board.
“I don’t want this to be next council’s problem; I want to get after it. Also, I don’t care if I’m elected again, so,” he said, eliciting a round of laughter from the crowd and his council colleagues blended with a few surprise “wows”.
Speaking in favour of the motion, Coun. Connie Anderson said it will be great once the 2nd Avenue NW and Centre Street North projects are finished, and added the improved appeal is “going to make a huge difference to what comes to town and looks to come to town.”
With no members of council speaking in opposition, the mayor called a vote on the motion, which carried.
The operating budget for 2024 forecasts total cash expenditures at $9.7 million along with revenues of $5.3 million with the remaining roughly $4.4 million to be funded through taxation, the Fortis franchise fee, Municipal Sustainability Initiative grant, as well as restricted surplus accounts where identified.
By comparison, the 2023 budget had projected cash expenditures of less than $9.1 million and revenues amounting to a little more than $5.1 million with the remaining nearly $4 million to be funded through taxation, fees, grants and surplus accounts.
The 2023-26 four-year operating budget and corresponding 10-year capital plan is available in full on the municipality’s website, www.sundre.com, by clicking on “Council” under the “Your Government” tab to access meeting minutes and agendas.
