On March 11th the City of Wetaskiwin Council will tackle a difficult decision to provide approval for the proposed 7.4% tax hike and the 8.1% utility hike.
On February 11th, 2013, Randy Plant, President of the Wetaskiwin Chamber of Commerce stood before City Council and declared, “One of our conclusions is that the process is flawed in that Council has not provided clear direction to City Administration as to what is expected to be brought forward in the sense of a responsible budget. (I.e. 5% budget increase vs. 14.2% or 9.4%)”. On February 19th, Council deliberated and reduced the increase to 7.4% but utilities remain at an 8.1% increase. On March 11th, Council will meet again and officially decide whether to accept the proposed budget.
Although I attend all Council meetings, review the agendas, prepare a summary (Highlights) of the meetings and try to stay informed about all the issues, I found this budgeting process to be quite different than others I have worked with. Or perhaps the City lacked in communicating the ‘how’s and whys’ leading up to, and during the entire process.
Here is the budgeting process I observed
Wetaskiwin City Council ended 3 days of budget deliberations on January 10th. An astounding proposed increase by Administration of 14.2% was presented by Mayor Bill Elliot and City Manager, Ted Gillespie. Over the three days, this was whittled down by City Council to 9.4% for 2013 and 7.4 % for 2014.
On Friday, February 15th the Aldermen (and media) were provided with a list of 24 budget items to deliberate while seeking a reduction from 9.4% and establish an increase that was deemed more reasonable. Each percentage of tax equals approximately $112,000 in expenditures.
On Tuesday, February 19th Council debated each of the 24 items trying to find some precious dollars in savings to the taxpayer. Mayor Elliot presented each item and following subsequent debate, Council voted on whether they wanted to ‘cut or keep’ each of the items. They concluded the deliberations with a draft budget receiving a majority approval by Council.
This is what I found confusing
From the information I (and the Aldermen, Chamber, ratepayers and everyone else who was interested) had, it appears this was a spending budget. Nowhere during the process did I see where Managers were required to dig deep, line-by-line, searching for savings and potential budget cuts. Nowhere did I see identification of what items or services are nice and which ones are absolutely necessary. Instead, the Managers presented and defended their wish lists to Council and asked them for a 14.2 %, and later a 9.4% increase in spending.
The other confusing aspect of the process is operating budget requests (providing programs and services) and capital budget requests (buying equipment or building facilities) were grouped together. Operating budgets typically have a life span of one year and are funds used to ‘operate’ the City whereas capital budgets are multi-year and require operating dollars after the items are purchased or built. Once separated, it becomes easier to establish and identify budget cuts or increases, (although admittedly, the City does have an equipment pool where planning is based on capital expenditures).
Strategic Plan and budgeting process could be more efficient
City Council created a Strategic Plan which is a list of values they want to achieve and an overall vision for the City. As suggested by the City, “The Strategic Plan is one of the most important documents that City Council produces each year. It is the basis of the upcoming budget and highlights the priorities Council has for the City. This plan, developed by City Council, outlines the Goals, Outcomes, Actions, and Measurements that will direct the upcoming budget process as well as all Administrative recommendations that are brought to Council for consideration.”
Given these guidelines it would seem reasonable that Administration could prepare and present a budget that would be acceptable. And that is exactly what they thought they had done except they missed one important disturbance factor, money. Simply, Administration should have been asking Council, “what is the tax increase that you and the community can live with?” and prepared and presented a budget based on those parameters. Instead valuable time and money was wasted having Council hash through considerable detail to whittle down item-by-item from 14.2% to 9.4% to 7.4%. It was not fair nor was it efficient to ask Council to make decisions on which specific items should be cut or kept. That is Administration’s job. Council is not familiar enough with the day-to-day operational needs and expenses and frankly, if I was a City employee, I would not want the decision of whether my services are required or not to be put in the hands of Council.
Look out in 2014
Unfortunately the challenge doesn’t stop there. In addition to property tax and utility tax increases, Aldermen must keep in mind ratepayers will also be faced with increases to user fees for facilities, programs and services. Also, it is expected the tax notice will see an added (likely significant) increase due to the Wetaskiwin Area & Lodge Authority tax and the education tax. The City collects these taxes but has no control over any increases.
Although the press release claims 8% of tax increases are beyond Council’s control, approval of building a $22,400,000 Aquatic Centre was, and has added a 3.1% tax burden in 2013. This will become a much bigger burden in 2014. Operating costs laid out in the Aquatic Centre Business Plan predicts costs to increase each year from $772,860 in 2012 to $1,669,485 in 2015 leaving a net operating shortfall (taxes) of $716,130.
The budget will be brought to the February 11th meeting of City Council for official approval. The meeting is open to the public.