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Town deficit looming in future

Posted on December 14, 2016 by Taber Times

By Trevor Busch
Taber Times
tbusch@tabertimes.com

Taberites will be forced to swallow a 2.5 per cent bump to their property tax rates in 2017, while moving forward the town will be facing projected deficits of roughly $700,000 in 2018 and 2019.

At their Nov. 28 regular meeting, town council voted 5-1 to adopt the 2017 operating budget out of the three-year plan, with further discussion by council regarding the deficiencies in the 2018-2019 budget. Coun. Joe Strojwas opposed the motion, and Coun. Jack Brewin was absent.

“In 2017, we are balanced. In 2018, there’s a $700,000 deficit, and in 2019 there’s a $700,000 deficit,” said finance director and acting CAO Devon Wannop. “If you guys are comfortable with it, you can approve and adopt — because it isn’t balanced, you only adopt 2017 of the three-year plan — to be obviously re-looked at next year to decrease that $700,000 deficiency to being balanced for 2018.”

The budget incorporates a 2.5 per cent property tax increase (1.5 per cent due to inflation and one per cent due to the provincial carbon tax levy). According to administration, the budget as presented is not balanced for 2018 and 2019, and “will need to be discussed further to ensure we are in compliance with the Municipal Government Act”.

At their Oct. 24 regular meeting, town council voted 6-1 to add a one per cent increase to its budget in 2017, and corresponding amounts in 2018 and 2019, to cover the provincially-imposed carbon tax increase to be added to the property tax increase. Coun. Randy Sparks opposed the motion.

For 2017, total revenues are expected to ring in at $22,230,586 (down $379,361 from 2016). The town is expecting to bring in $1,739,876 in franchise fee revenue, while government transfers will contribute an additional $1,159,922. Net taxes will amount to $8,629,626, with a further $8,260,069 in sales and user fees. Other revenues include fines ($502,600), transfer from reserves ($305,200), investment income ($200,000), licenses and permits ($247,665), other revenues ($234,508), penalties and costs of taxes ($157,500), rentals ($769,920), and sales to other governments ($23,800).

“With the operating budget, there hasn’t been a lot of changes, obviously because I wasn’t directed to make any changes to it,” said Wannop. “We did have a couple of discussions about moving the bylaw budget into the police budget, just due to some of the changes that had to be made regarding their audit that they received.”

Strojwas was strongly opposed to regulatory requirements that mandate changes which will place bylaw enforcement directly into the hands of the Taber Police Service rather than the Town of Taber.

“I’m still not comfortable with the fact that bylaw enforcement becomes a police department function under the police commission. I still feel that should be a council direction. I’m not totally happy with that — I know the majority of council is in favour of that. I’m just not comfortable with that — I realize there’s a lot of pros for it, but it does take bylaw enforcement out of council’s hands and leaves it with the police commission and police department. So I really have a problem, and I’m voicing my opinion on that.”

Wannop argued the change does not leave town council without influence over bylaw enforcement at the police commission level.

“I can understand your concern on that, however, you do have two council members that are on the police commission, so if you do have concerns about bylaw, you can easily direct those two council members to say something to the rest of the police commission. That’s sort of your way of being able to manage that, however they are only two of the police commission’s seven. I can definitely understand what you’re saying, however I believe its the best situation for the town moving forward.”

On the expenses side in 2017, total expenditures are expected to ring in at $26,526,711. The town is estimating $4,296,125 in amortization, while contracted and general services are expected to cost $5,804,375. Materials, goods and supplies will cost $2,814,862, while some $9,041,130 has been earmarked for salaries, wages and benefits (up $961,720 from 2016). Other expenditures include bank charges and interest ($10,000), interest on long-term debt ($194,175), other expenditures ($155,001), purchases from other governments ($771,778), repayment of long-term debt ($613,493), reserve transfer ($2,190,211), and transfers to local boards and agencies ($555,452).

While the town’s operating budget is balanced for 2017, the outlook for future years is not currently so bright, with the town showing a cash deficit of $699,896 in 2018, and $712,714 in 2019. Under changes brought forward through the newly-revised MGA, municipalities will be required to present a three-year operating budget starting in 2017.

“We can’t pass a three-year budget with any cash deficiency, and as you can see in 2018 and 2019 we have a cash deficiency,” said Wannop. “At your last council meeting (Nov. 14) council had requested that we not look further into cuts in 2018 and 2019 to analyze future years. That’s why we can’t adopt three years at this time. That was my original intent, but your guys’ conversations have changed that.”

The Town of Taber still has a budgetary grace period before the new MGA rules come into effect.

“And we’re OK, because we have another year before we’re required to do a three-year,” said Coun. Andrew Prokop.

Under the current operating budget, the utility rate model is being held steady.

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