Tax increase planned despite $1.187M surplus

Chris Clegg
South Peace News

The Town of High Prairie is considering a four per cent tax increase this year despite an anticipated surplus of $1.187 million from 2021 operations.
Council, which will pass its tax rate bylaw soon, says it needs the money for future projects, and blames the Alberta government for decreased revenues.
“Over the next five years, the town estimates that it will need about $19 million to upgrade and maintain its infrastructure,” says Mayor Brian Panasiuk.
“This infrastructure includes sewer lift stations, improvements to the water treatment plant, roads, water and sewer lines, recreation facilities, etc.”
In 2021, adds Panasiuk, the surplus was due mainly to COVID but also good management.
“The surplus from 2021 is being placed into reserves and will be used to help fund future capital projects,” he adds.
Council needs about $4 million per year to fund capital projects in each of the next five years.
“At our current tax rate, we budget setting aside about $500,000 for capital projects,” explains Panasiuk.
“With the increase in the tax rate, this will be close to $800,000 which is still short of the $4 million per year.”
To help increase revenues, council is looking to fund the difference with grants, using existing reserves and, as a last resort, borrowing money.
“Borrowing is a last resort as you pay interest and restrict the town well into the future,” says Panasiuk.
Other factors have affected council’s bottom financial line including the downloading of policing costs to municipalities from the provincial government, inflation, and the reduction of grants, again from the Alberta government.
“The tax increase will help the town be proactive in funding more of the upcoming capital projects and reduce future borrowing costs,” says Panasiuk.
CAO Brian Martinson says the four per cent increase will generate an additional $150,000 yearly for capital and future projects.
Martinson added projected government funding over five years is $3 million with a remaining shortfall of $16 million.
“With the [Alberta] government downloading on municipalities the onus is on council and administration to find ways to generate revenues; however, this type of revenue is impossible to recover solely from the town’s tax base,” says Martinson.
“Doing nothing is not going to solve the problem,” he adds.
Chief financial officer Rita Maure presented the numbers to council at a special meeting May 3. Due in part to COVID, spending in recreation and roads decreased significantly.
All items are not listed but the surplus was generated in part due to:

  • a decrease of $257,000 in the roads budget. A salary and benefits decrease of $57,000 and a savings after switching to LED lights resulted in a savings of $73,000. As well, interdepartmental charges decreased $67,000;
  • recreation department spending decreased by $178,000. The indoor pool alone decreased spending by $128,000 due to COVID closure and the arena incurred a savings of $50,000 mostly due to one less full-time staff.
  • the surplus for sewer increased by $106,000 due to various factors;
  • a decrease in spending in the gas department of $93,000 due to increased revenue, and a $20,000 drop in salaries;
  • a savings of $91,000 was incurred in planning and development;
  • a decrease of $105,000 in administration expenses, of which $89,000 was due to illness and vacancies;
  • overall council expenses decreased $76,000 including $44,000 for council itself, in part due to one less councillor for nine months;
  • a savings in the parks budget of $38,000 due in part to less costs in supplies and materials, repairs and maintenance.
    Maure recommended a tax increase.
    “Planning for the future is the only way a municipality can remain sustainable,” she wrote in her report.
    At the meeting, council decreased its annual contribution to STARS to $4,000 from $8,000 for this year and decreased its Sponsorship and Grants to Organizations budget to $35,000 from $39,000.
    Highlights of the 2022 capital budget are:
  • Sports Palace ice pad replacement delayed until 2023 with an estimated cost of $1 million;
  • lagoon dredging will be delayed until 2023, estimated cost to exceed $200,000;
  • walking trail project to proceed at a cost of $50,000 thanks to a donation from Tolko;
  • Gordon Buchanan Recreation Centre roof repairs, estimated to cost $250,000 to $350,000;
  • purchase of a backhoe for $210,000 and a Bobcat for $90,000;
  • arena cooling tower for $376,000.
    The total capital budget is $1,975,634 with $667,134 from capital reserves, $1,302,500 from grants and $6,000 from operating.
    Martinson says another problem in capital funding is lost revenue of over $1 million from Big Lakes County and cuts in the MSI funding the last few years.
    “Using a portion of the town’s reserves along with grants, this council is planning for the long-term future sustainability of the town’s infrastructure,” says Martinson.

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