Two Year Budget Proposes 14.2% Increase In 2013 And 4.2% In 2014

Pipestone Flyer

Councilor Mark McFaul (left), and Al Steckler (right), City of Wetaskiwin Manager of Finance.

Tax rate

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.

This revenue requirement is then used to calculate the tax rate. The tax rate is the percentage of assessed value at which each property is taxed in a municipality. The revenue requirement is divided by the assessment base (the total value of all assessed properties in the municipality). 

Mayor Elliot introduces 14.2%, 4.2% and 9%

Mayor Bill Elliot seated at the Centre of what was the Judge’s stand in the Old Court House and is now the Mayor’s Stand in City Hall announced:  Administration has collected a proposed budget for 2013 and 2014 based on the Goals and Objectives formulated by City Council. Based on these goals, objectives, and Council meeting direction, the draft budget represents an increase of 14.2% in 2013 and 4.2% in 2014.  It’s now up to Council to go through the draft budget and determine their priorities. 

And with that, the budget presentations by Administration and ensuing debate by the Aldermen began.

Two year budget is new this year

What’s new in the budgeting process this year is the City is preparing a two year budget; 2013 and 2014. Part of the logic behind this move is to offer continuity and stability in the decision making process in the event there is a change in Aldermen following the Monday, October 21, 2013 fall municipal election. The budget deliberation is a three day process open to the public on January 7th, 9th and 10th.  

City Administration outlined key points the Mayor and Aldermen are to consider during the three days of debate. Pipestone Flyer offers one person’s comments to provide supplemental information to ponder during the decision making process. 

City Administration:  The proposed budget has been prepared taking into account the City of Wetaskiwin’s Strategic Plan, which was approved by Council July 23, 2012. At that point, having received direction from Council on how to proceed in the future, City Administration began to organize the goals and objectives listed in the Strategic Plan. These included:  Serve & Protect our Community;  Increase Pride & Communication;  Be Sustainable;  Support, Expand & Diversify our Economic Base;  and Achieve Organizational Excellence. 

P.F. comments: The Strategic Plan was created prior to July 23, 2012. Are the goals and objectives current and viable enough to guide budget decisions for the next two years? Costs of the Aquatic Centre have escalated, cost of the Main Street project has increased dramatically. Are the goals and objectives in the strategic plan realistic enough to guide financial planning decisions? For example, there have been few results from ‘Be Sustainable’ and  ‘Support, Expand & Diversify our Economic Base’. Although Wetaskiwin has ample opportunities to attract individuals and businesses through unique characteristics such as low housing costs, lifestyle, location, healthcare and education opportunities, the ‘Increase Pride & Communication’, needs to do a better job of convincing others of that.

An old saying – The first step to solving a problem is realizing there is one. 

City Administration:  Administration has assembled a proposed budget for 2013 and 2014 based on the Goals and Objectives formulated by City Council. Based on these goals, objectives, and Council meeting direction, the draft budget represents an increase of 14.2% in 2013 and 4.2% in 2014.  It’s now up to Council to go through the draft budget and determine their priorities.

P.F. comments: Wetaskiwin has a large population that is surviving at a low socio economic (income, education, and occupation) level and also has many seniors who are retired in this community on a fixed income. Wetaskiwin is the community of choice for many retirees.  Housing is reasonable priced, healthcare is top notch, location is great, But huge tax increases will reduce that competitive advantage.

City Administration:  Although some of the increases are a result of new initiatives, others are beyond the City’s control.  The draft budget has included 1.9% inflation, a 2% increase for the new Provincial Contract for the RCMP, 3% for the new aquatic and fitness centre and 1% for increased pension costs and the financial system lease. 

P.F. comments: The City is responsible for all financial decisions. E.g. 3 % tax increase for the new aquatic and fitness centre. A household on a low or fixed income won’t see increases in revenue that are remotely related to the proposed  tax increases they will be faced with; 1.9% for inflation,  2% increased contract,  3%  aquatic centre, 1% pension and services. The proposed tax increase totals 14.2% in 2013 and 4.2% in 2014 for a total of 18.4 %. Add to that, a 9% increase in utilities. 

City Administration:  The proposed budget includes $1,178,655 for projects in 2013.  This is an increase of $713,561 for 2012.  An additional $70,000 is proposed for 2014 for a total of $1,248,370.   These projects are a combination of infrastructure replacement and improvements to service levels. 

P.F. comments: Although the projects are not specifically identified or details provided, costs for projects in 2012 exceeded estimates. e.g. initial estimates for the Aquatic Centre jumped from $11M to $22.5M.  The City refused an early tender for the complete Main Street Revitalization package,  Phase I – IV for  $14.6M (City Hall to Water Tower) and  accepted a tender for Phase I (Terracotta to TD Bank) for $4.2M plus added costs of almost $752 K for features such as benches, lights, etc. Final costs for Phase I have not been presented.

City Administration:   The City's utility departments, including water, sewer and solid waste operations, are funded on a user pay system. Unfortunately, the system is underfunded at its present rate structure. In 2011, the City started a process to budget increases in the utility rates as a start to becoming financially sustainable. The approach taken is to phase-in rate increases so that the utilities will eventually cover all of the operating costs and the annual inflation on the historical cost of the tangible capital assets so that the utilities can fund their replacement. A proposed 9 per cent increase in 2013 will bring the City closer to sustainability. 

P.F. comments: Some may view the cost of utilities as another form of taxation but Municipal Affairs states: Property taxes are not a fee for service, but a way of distributing the cost for local government services and programs fairly throughout a municipality. E.g. snow removal, parks, ambulance, fire protection, etc.

Utilities are based on user pay or a fee-for-service as opposed to ‘community’ benefits.

City Administration:   A comparison with other urban communities in Alberta provides 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. 

P.F. comments: comparisons with similar municipalities are useful financial indicators. To complete the financial picture one must assess that “it isn’t necessarily what you pay, but what do get for what you pay” and “maybe you would like to have what someone else has but simply can’t afford it.”

City Administration:  Another comparison with other urban municipalities to take into account involves Operating Gains and Costs. In 2011, the Cost Per Capita with regard to Total Operating Costs was $1,848 in Wetaskiwin. By comparison, the Cost Per Capita was $2,762 in Camrose, $2,742 in Leduc, 

P.F. comments: see above

City Administration:  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.

P.F. comments: see above

The presentations and debates will continue on January 9th and 10th as City Departments defend their cases for funding. Aldermen will try to find ways to curb the rampant spending. Somewhere in the middle will be the tax rate that will determine the amount that will be needed to be printed on a cheque and delivered to City Hall in June of 2013.