Note: the final numbers and budget decisions are not completed at press time. The following is information and numbers that are being considered by Council. Final decisions may not be available until December 19th.
When I bought my last vehicle, the sales person and sales manager came forward with many scenarios of what the vehicle would cost in discounts, administration fees, accessories, other discounts, taxes, etc., but in the end, the only number that really interested me was the ‘bottom line’ cost of the vehicle, not how they arrived at the number. Just let me know how much money would be leaving my pocket and what the vehicle would cost me in the end. What does this have to do with the budgeting process of the City of Wetaskiwin? The main concern of ratepayers is that programs and services be maintained or improved, and what will that cost them.
The first problem with the budgeting process appears as the City has implemented their traditional incremental budgeting process where managers justify their budget requests based on last year’s approved budget amounts. It might be a refreshing challenge for managers to prepare budgets using the, “zero-based budgeting” method where every line item of every budget request must be justified and approved. Each budget request must be re-evaluated completely from a zero base as opposed to historical budget approvals. Saving vs spending.
On December 8th, 2014 at 9:00 am Mayor Bill Elliot, Councillor June Boyda, Councillor Joe Branco, Councillor Bert Horvey, Councillor Patricia MacQuarrie, Councillor Tyler Gandam and Councillor Wayne Neilson began the lengthy and challenging process of deliberating the 2015-2018 operating and capital budgets proposed by City administration. Early in process it appeared that ratepayers would be taking a cheque to City Hall that is 5% larger than their June 2014 tax assessment. There is also an estimated increase of 1% in growth assessment planned by City Administration. So, to grab a quick number from the budgeting planning binder, the proposed budget for 2015 is $33,903,062, an increase from $28,698,032 in the 2014 budget.
But then there are additional proposed taxes. The additional ‘fees’ that could be considered as additional ‘taxes’ were proposed by Administration. Add a separate tax increase for utilities of 5%. Add to that a $10 per month administration fee intended to sustain utilities. Then on December 15th, a ‘dedicated infrastructure surcharge’ of 1% tax increase for 1 year up to 4% tax increase per year for 5 years was proposed by Administration. (The approximate value of 1% tax increase for 1 year is $135,000, increased to 2nd year $276,750, 3rd year $425,888 – and so on) If Council approved a 2% tax increase for infrastructure surcharge the increased revenue would be $270,000 for year 1, $553,500 for year 2 and $851,175 for year 3 and so on.
As suggested by Administration during the introduction to 2015 – 2018 draft budget overview, the draft budget was prepared based the strategic plan approved by Council. The following is brief explanation of the (proposed) significant changes in revenues and expenses under the major categories:
• Taxes and G.I.L. are shown in the draft budget to increase in 2015 over the 2014 budget . This increase is based on a 1% growth in assessment and a 5% increase in the mill rate. For 2016 and onward, projections are based on a 5% increase. (Note – Council has not decided if they will approve a 1, 2, 3 or 4 year budget)
• In 2016, there is an increase in the electrical franchise fees (from 10% to 12%). This change results in a $150,000 increase in revenue.
• In 2015, it is recommended that fees for utility services increase by 5%. Also included for consideration is the implementation of an Administrative Charge of $10 per month to the utility bill to cover the increased costs of providing the service.
Where do all the taxes go? The proposed budget increase took into consideration increased capital and operating costs of many community, protective, and corporate services as well as engineering and development.
The City’s utility departments include the water, sewer and solid waste operations that are funded on a user pay system. Unfortunately, the system is underfunded at its present rate structure. In 2013 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.
So what will the ‘vehicle’ cost when City Council concludes their budget deliberations? As we (and Council) desperately try to sort out all the ‘discounts, administration fees, accessories, and other’ presented by Administration during the budgeting process, it reminds me of an old saying I once heard, “It’s easier to ride a horse the direction it’s going.” That is why Council and the citizens of Wetaskiwin all want to be sure which way the City’s horse is going so we can find a way to ride along in the same direction. We all strive to be part of an organization that is funded in a manageable manner leading to sustainability. We understand the importance of being able to pull the reins at the right time, give a kick in the ribs when necessary and hope we don’t have to jump off at some stage if the horse gets out of control.