BANFF – Banff’s politicians will consider reducing its $20 million municipal tax levy by $3.4 million on the low end to $7.6 million on the high end to help residents and businesses financially struggling in the face of the COVID-19 pandemic.
Council will consider options to reduce the municipal tax levy by 10, 15, 20 or 30 per cent on Monday (May 11) given the economic devastation to the tourist town, where 85 per cent of the workforce have been laid off and all but essential businesses are closed.
The business community is calling on council to go with a 30 per cent reduction of $7.6 million to the tax levy, an option that includes reducing the planned $4.7 million tax-funded transfer to capital reserves by $4.2 million.
“The COVID-19 crisis has been deeper and more prolonged than anyone could have anticipated. We are not on a road to recovery yet,” said Darren Reeder, executive director of Banff and Lake Louise Hospitality Association (BLLHA).
“We must all – private and public sector – manage to the highest degree of fiscal prudence to weather the storm. For this reason, BLLHA appreciates the guidance Town administration has provided to council in advance of its May 11 meeting.”
In mid-April, council directed administration to bring back four operating budget scenarios that would result in a 10 per cent, 15 per cent, 20 per cent, and 30 per cent reduction in the municipal tax levy over 2019 levels for consideration.
It was to be done by finding additional cuts to staff wages and benefits, a reduction in transfers to capital reserves, using a portion of the 2019 budget surplus and a cut in spending on programs and services.
Administration is recommending $1.4 million in cuts to staff wages and benefits and another $1.37 million reduction related to specific programs and services across various departments. This plan – as well as taking into account a $721,000 adjustment to the operating budget because of lost revenue or additional expenses associated with COVID-19 – would lead to a 9.56 per cent reduction to the municipal tax levy.
For further cuts as directed by council, administration recommends using $687,492 of a $1.28 million unrestricted surplus from 2019, and lowering this year’s planned $4.7 million transfer to capital reserves – the municipality’s savings account for infrastructure projects.
To get to a 10 per cent reduction of the municipal tax levy of $3,483,010 would require a $91,456 reduction on transfer to capital reserves, while a $1,126,390 reduction in capital transfer would be needed to get to a 15 per cent reduction, or $4,517,854, to the tax levy.
A 20 per cent cut, or $5,552,698, would require a capital transfer reduction of $2,161,234, while a 30 per cent municipal tax levy cut would mean a $4,230,923 capital transfer reduction for $7,622,387 total municipal tax levy reduction.
Chris Hughes, the Town of Banff’s corporate services director, said administration does not recommend using the balance of the budget stabilization reserve at this point.
“This will allow for contingencies if there are additional expenses or further reduced revenues, or if there is a need to react to situations as they arise,” said Hughes, noting the current undedicated balance in the reserve is about $570,000.
The $1.4 million cut to wages and benefits is a result of a hiring freeze, elimination of performances-based increases, and reduced hours of work and overtime requirements. The municipality is also using in-house labour on capital projects when appropriate and putting a stronger focus on reducing accrued overtime.
“In total, 71 employees are impacted by these reductions in wages and benefits, which represents 36 per cent of current staff levels,” said Hughes. “A further 43 positions will not be hired.”
Mayor Karen Sorensen said it’s important to reopen and again debate the 2020 operational budget given the fallout of the COVID-19 pandemic.
“I am confident that council believes that this is a time where we need to reduce the tax burden on our residents and businesses,” she said.
Administration looked at all programs and services included in the 2020 budget to find cuts, which includes elimination of the $60,000 Calgary-Banff On-It transit and cancellation of $140,000 Canada Day festivities among many others.
They looked at reductions where a drop in visitation warrants a lower level of service, reducing services considered more discretionary, as well as those that are considered unsafe or not permitted due to current health orders. In addition, service level reductions were considered wherever possible without impacting council’s long-term ability to advance strategic priorities.
“This approach was intended to respond to the short-term imperatives presented by the pandemic, while recognizing that moving forward strategically will leave us better prepared when recovery comes,” said Hughes.
Specifically related to the fallout of COVID-19, the Town is expecting a drop in municipal enforcement fine revenue of $559,100 and reduction in RCMP fine revenue of $179,800. There is also predicted to be a $1 million drop in revenue for water and sewer consumption and a net loss from recreation facilities of $137,613.
There’s an estimated $157,000 in additional expenses related to dealing with the new coronavirus pandemic, including $100,000 for additional communications costs and $10,000 on contracted services for the emergency coordination centre.
At its April 16 meeting, council directed administrations to to defer $12.7 million worth of capital spending into 2021 or beyond – and found $1.27 million worth of savings from 2020 projects.
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