By Trevor Busch
While facing increasing pressure by administration to contribute more into the town’s capital reserves to tackle a looming infrastructure deficit, town council is refusing to consider a property tax increase for 2016 that would push beyond an overall 1.5 per cent.
Following discussion of eight options the Town of Taber could take in approaching future capital projects, at their Nov. 23 meeting town council came to an informal consensus to adjust the capital project rankings and complete projects based on new rankings (Option 4), while maintaining a 1.5 per cent property tax increase.
“That’s up to you, but whatever percentage we would raise it by would be a direct increase to capital reserves for future capital projects,” said finance director Devon Wannup.
Administration had recommended option seven, which was ultimately declined by town council, calling for the completion of capital projects with rankings one and two, while raising property taxes to an overall rate decided on by council above 1.5 per cent, with that extra capital to be put toward reserves for future capital purchases.
“We’ve maintained from the start that we want that 1.5 per cent,” said Coun. Andrew Prokop. “That’s my concern.”
If all future projects currently on the drawing board were to be undertaken by town council, administration is projecting $46 million in capital projects over the next three years. For 2016, the Town of Taber will be contributing only $2,654,174 to reserves. Total proposed capital purchases for 2016 top out at $17,613,600.
“The 1.5 per cent works great for operations, it’s just if you want to continue to fund capital projects,” said Wannup, who warned that capital reserves could be wiped out under the current budget model. “We are on a fast slope of not being able to fund and pay for these projects out of reserves. After 2018, we won’t have any reserves and we’ll be borrowing for all capital projects that we do in future after that. If you borrow, it just gets you on that slippery slope where borrowing has to come out of operations, so it’s either a declining current level of service, or an increase to property taxes, just to be able to pay for the principle and interest payments.”
Multi-million dollar infrastructure demands over the next three years has town administration warning that annually underfunding reserves at current levels will seriously deplete or even wipe out the town’s reserves should the municipality choose to take on all of the required projects currently proposed.
“We are in a capital infrastructure deficit right now,” said Wannup. “Most municipalities in Canada are in this deficit, it’s just are we willing to put in that effort, or that extra amount, so that we can try to get ourselves out of it?”
Coun. Rick Popadynetz’s response to that challenge was a resounding no, citing the current state of the economy and a favourable environment for large-scale borrowing.
“I’m not in favour of raising taxes in a recession, by any means, at all,” said Popadynetz. “Our council has had this discussion already on what our increase is going to be, and I don’t like trying to revisit it, to increase it, just for capital. It’s a time to borrow as far as I’m concerned. Interest rates are low, this is a good time to borrow.”
Coun. Joe Strojwas was also willing to concede the possibility of the municipality taking on debt in future years in order to avoid short-term tax pain in 2016.
“Both provincial and federal governments have committed, in essence, to building infrastructure across Canada. I’d like to ride out one more year and see how committed they are to putting money back into infrastructure, and how that will affect us. We’ve set a guideline now of 1.5 per cent for this year, we need to stick by it, make it work for this year, and see what’s coming in the new budgets in spring. If we have to do some projects and move into some borrowing regimes, I think we can still defer that for one more year.”
Coun. Jack Brewin counselled fiscal restraint in 2016 and a desire to keep spending under control while maintaining a competitive tax environment.
“I concur with Joe (Coun. Strojwas), I don’t think now is the time to be spending. The governments, we don’t know which way they’re going to go. I would like to hold her down for a year at 1.5 per cent, for at least one more year.”
While recognizing a desire for fiscal restraint, Wannup pointed out this desire will signal some troubling financial realities for the Town of Taber in future that will need to be reconciled.
“If we maintain this 1.5 per cent, we’re cutting $6.5 million from the $17.5 million (capital budget).”
In the prevailing economic environment, the Town of Taber needs to focus on core services rather than satisfying pie-in-the-sky wants, according to Coun. Randy Sparks.
“In times that we’re in right now, we need to be concerned about the core services for the Town of Taber. And there’s some things here that aren’t really core services. If the population of the town was growing by 10 per cent per year — it’s barely one (per cent) — I could understand that. The general public are not aware of where the town could be sitting in the next four years, so we really need to tighten our belts and make sure we’re only spending that money on things that are really needed. Take a year, see if the two governments (federal and provincial) are actually going to come through with what they have to say. We need to be concerned with core services.”
Sparks went on to suggest a number of capital projects that do not fit his criteria for core services and could potentially be eliminated or postponed in order to maintain an overall 1.5 per cent increase to property taxes.
“Are the old courthouse windows a core service? No. Actually is the trail extension to the M.D. park, the next $100,000 phase, is that a core service? No. Is the 50th Street Gateway? Absolutely not. Sludge de-watering system? No. Administration Building? No. Even though these are all wonderful things that we’d like to do, we’re not putting ourselves in a real good situation by not putting more money into reserves, and we need to do that. So some of these need to be cut. We started this whole thing saying 1.5 per cent. We need to stick to our guns, stick with that 1.5 per cent, and see what the government is going to do, because every municipality in Canada is thinking the same thing.”