Tax Woes for Wetaskiwinites

Pipestone Flyer

One person’s comments

    

    The year 2013 will be remembered by ratepayers as the year they were the feeling squeezed into a 9.5% financial sandwich. This is the year they will find themselves caught in the middle of “paying for short falls of years gone-by and paying for increased needs in years to come.”  

    As an analogy, the City is in a position similar to a homeowner who has not maintained or upgraded his home for years (City infrastructure like roads, sidewalks, buildings etc.). Nor, has the homeowner put away sufficient savings to do the repairs and upgrades for the future (similar to reserves needed by the City).  

    The home owner has choices.  (1) Save money today by deferring the replacement of the rundown fridge and dishwasher until they get to a state where they are no longer repairable. (The City has deferred taxes for years and the infrastructure has deteriorated).  (2)  Save money little-by-little and perhaps accumulate enough to finally fix the house years down the road without enjoying the improvements in the meantime (3)  Borrow money to do the upgrades  (4) Seek additional sources of revenue to help pay for the upgrades. (4) And, having learned the tough lesson about not having accumulated savings in the past, take steps to increase RRSPs and other savings to prepare for a brighter future (which the City in part, is planning to do with the tax increases). 

    A comparison with other urban communities in Alberta provided Council with an indication of how the City stands with these communities. In 2011, Taxes Per Capita in Wetaskiwin were $835, while Sales and User Charges Per Capita were $505, for a total of $1,340. By comparison, Leduc’s combined total was $1,997, Camrose had a combined total of $2,052, Fort Saskatchewan had a combined total of $2,090, and Beaumont had a combined total of $1,310. 

    Each year, municipal councils determine the amount of money they need to operate their municipality. From this amount, the council then subtracts known revenues (for example, licenses, grants, and permits). The remainder is the amount of money the municipality needs to raise through property taxes in order to provide services for the year. 

    For three long days, City Council listened as each of the City Department Managers made their case for a share of the proposed budget increase of $1,178,655 (14.2 %). There were new positions, equipment, Wetaskiwin Air Show, Council Public Relations, 2013 election expenses, Communities in Bloom, new computers, archives, library expansion and the list went on and on. 

    The 9.5% increase does not include 9% for utilities, education tax and Lodge Authority tax hikes. 

    Following (often heated) debate, City Council found they could live without $531,170 of budget requests and dropped the proposed tax increase from 14.2% to 9.5 % for 2013. Since this was a two year budgeting process the tax increase for 2014 will likely be in the same range. This increase does not include an increase in utility rates of 9% or any increases in user fees for facilities, programs and services. The City is also responsible for collecting the education tax and Wetaskiwin Area & Lodge Authority tax over which it has no control in increases. In recent years the increase has been approximately 3% per year. 

    The draft budget includes 3% for the new Wetaskiwin Aquatic Centre, 1.9% inflation, a 2% increase for the new Provincial Contract for the RCMP, and 1% for increased pension costs and the financial system lease. Proposed budget increase 2014 is likely in the range of 9-10%

    “It’s now up to Council to go through the draft budget and determine their priorities” was the challenge offered to City Administration and Council on January 7th, 2013 as they began the 3 days of budget debates. A 14.2% increase was discussed, pared down, discussed some more, pared down some more until Council finally approved a 9.5% increase at 5:27 pm on Thursday, January 10th.

Wetaskiwin ratepayers caught in a (9.5%) financial sandwich – Part II, is it justified?

    Ratepayers will not be happy with the announced tax increases as they look with envy at our neighbour’s modest increases of 3.9% in Leduc and 3.65% in Camrose. Ratepayers will not be happy when they receive their tax notices. Ratepayers will not be happy in June when they take their cheque to City Hall. And ratepayers may show their displeasure in the October, 2013 municipal elections. 

    But City Council is to be commended for taking a hard stand and biting the bullet with a 9.5% increase. They could have deferred more of the financial shortfall to the new Council following the October 2013 municipal election. 

    This is a large increase compared to our neighbours. But, it’s a necessary one if Wetaskiwin is to maintain and even improve programs and services and facilities. Unfortunately, due to bad planning in the past and insignificant residential, economic and industrial growth, Wetaskiwin residents will be tightly squeezed in the financial sandwich for many years. 

Why the utility rates are going up 9%

    Administration suggests, “the City of Wetaskiwin residents also receive the benefit of lower costs associated with Major Services such as water, sewer and waste removal. In 2011, the Cost Per Capita in Wetaskiwin was $432, compared with $505 in Camrose, and $514 in Fort Saskatchewan”.

    City Manager Ted Gillespie justifies the increase.  “The primary reason for the utility rate increase is to move us closer towards sustainability. As outlined in our strategic plan, we are to moving to full life cycle cost accounting. Just like on the Municipal tax side, when you look at depreciation of infrastructure, we have not been collecting enough to cover all our costs – just putting those costs off to future generations. This is a challenge all across Canada and these are the kind of steps we need to take to address it.”

    He and City Council are attempting to move to a more sustainable municipality and view tax increases as a necessary means to do that.  “No one is happy when taxes go up but, unfortunately, this is the reality in most municipalities. The City's utility departments, including water, sewer and solid waste operations, are funded on a user pay system. 

Taxes increase by 9.5%

    Poor planning in the past has left the City with a deteriorating infrastructure. As buildings, roads, sidewalks, utility lines, etc. need replacing, it will cost ratepayers more than they are historically used to paying. Planning for the future will also cost ratepayers more. As the City begins the process of creating reserves for future emergencies and replacement of capital assets (buildings, roads, sidewalks, utility lines etc.) it will do so in a more structured manner. This year the budgeting process included years 2013 and 2014, or two years. Gillespie is suggesting that in the next budget process a  4 year budget will be even more effective in preventing Administration and Council from “putting off  the cost of fixing and replacing until next year’ to avoid tax increases in the current budget year.

    Unfortunately, Wetaskiwin residents will be the victims of the financial sandwich for many years to come unless this community makes strategic investments and implements visionary financial strategies that will attract significant residential, economic and industrial growth to add to the sandwich filling. 

    To hear details, residents are invited to witness an unveiling of the 2013/14 budget at City Hall at 4:00 pm on February 4th. The budget will be brought to the February 11th City Council meeting for approval

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