BANFF – The Town of Banff is preparing its 2021 budget based on the 2019 base tax level plus inflationary costs.
Administration sought direction from the governance and finance committee on some one-time changes to the financial plan given the economic hardships being felt by residents and businesses due to the COVID-19 pandemic.
“Obviously we’re living in very uncertain times,” said Chris Hughes, the Town of Banff’s director of corporate services during the committee meeting on Sept. 21.
“Heading into our service review and budget season, we would like some direction from the committee on some specific topics, given the uncertainty that we are heading into.”
Banff’s financial plan is one of the key guiding documents for council’s annual review of municipal services, programs and projects leading into deliberations of the operating and capital budgets.
Guidance in the plan indexes the overall tax increase related to offering the same level of service at the Alberta inflation rate for the period ending June 30 of the previous budget year.
For 2021, administration requested direction on what should be used as the base budget and what, if any, growth council would like to use for an inflationary factor for the 2021 budget.
The current forecast for Alberta Consumer Price Index is 1.4 per cent.
After considering three options, the committee voted 5-2 to direct administration to prepare a budget based on a one-time change to the property tax cap calculation using 2019 as the base tax level, which is $20.7 million, plus 1.4 per cent inflation.
The amount presented in each of the three scenarios is below the 2019 starting budget, with any inflationary increases more than offset by the $643,746 surplus and $655,882 reduction in transfers to capital reserves.
“We are not committing to a budget today, we are looking at guidelines for presenting the budget to us,” said Mayor Karen Sorensen.
“This is a starting point for service review, and debate and discussion will come at budget.”
Councillor Peter Poole, however, said he wanted a fourth option to consider at budget – a reduction in the municipality’s budget given the financial hardships facing residents and businesses due to the ongoing COVID-19 pandemic.
“Many of us in our community are going through a belt-tightening period and many of our residents anticipate that the Town will try and endeavour to tighten our belt,” he said.
“We might have to trim some services in order to walk in step with the burdens faced by so many of our residents in this town.”
Mayor Sorensen didn’t disagree with Coun. Poole’s comments, but said she thought service review and budget was the time to have this debate and discussion; that this is just a starting point for administration to begin to draft a budget.
“I too agree that this budget year is going to be one where we have to do all we can to save and reduce spending, as much as we possibly can,” she said.
Coun. Poole responded to the mayor, saying administration should therefore be asked to bring back a budget scenario for consideration that includes a drop in services.
“It will help us understand what the magnitude of trade-offs between one department or another would be if we are going to have a five or 10 per cent drop in our operating expenses for the Town,” he said.
Mayor Sorensen said she philosophically doesn’t believe it is administration’s job to suggest cuts to services.
“I have never really seen that as administration’s job. Don’t get me wrong, it’s very helpful, and I think administration does bring us cost savings that they see,” she said.
“But those decisions are ours and that’s why we go through such a thorough process at service review.”
Banff Town Manager Kelly Gibson said he recalls one time in which administration brought back suggestions for tax reductions for council.
“It didn’t go very well,” he said. “There were number of services that were near and dear to council and most of those were not accepted.”
Coun. Grant Canning said he didn’t believe it was fair or reasonable to have administration find those reductions.
“I don’t want to see us getting into positions where different departments are getting into discussion about who’s more important, or what they do is more important,” he said.
“Quite frankly, I think that’s council’s responsibility. I would encourage councillors who are looking for further decreases in service levels to come to the service level review process with specific ideas.”
Coun. Corrie DiManno said the municipality needs to do its best to bring forward a budget that reflects the needs of the community, adding that could be a cut where a service isn’t necessary right now.
“That being said, there’s still so many unknowns and we don’t have a crystal ball and this situation is constantly evolving, so I do want to give us some room to be able to provide that base service going into these discussions,” she said.
“We did reduce the operating budget tax by 17 per cent in spring and we deferred or removed $14 million in capital projects, so this council has shown the commitment to try to alleviate the tax burden and I think that will be the tone going into the budget.”
Meanwhile, based on the committee’s direction, it’s highly unlikely there will be consideration of any new programs or projects, except perhaps those that are not tax-funded, but fully funded by an alternative source such as grant or donor funding.
“Allowances may be made in response to the COVID-19 pandemic, where safety of community is taken into consideration,” said Hughes.
Meanwhile, given COVID-19 challenges, 2021 service review and budget has been pushed back by about a month..
