BANFF – The Town of Banff’s draft operating budget for 2021 calls for a 4.67 decrease in municipal taxes over 2019 given the continuing financial hardships caused by the COVID-19 pandemic.
At a budget overview provided to council in mid-December, administration proposed a tax levy of $19.8 million for 2021 compared to the initial 2021 planned tax collection of $22.4 million.
The draft budget – to be released on Jan. 4 ahead of service review beginning Jan. 18 – currently has a tax levy of $23.5 million in 2022 requiring a 8.32 per cent tax increase, and $22.8 million levy in 2023 requiring a 5.34 per cent tax increase.
Officials say the proposed 4.67 decrease from 2019 has been achieved in many ways, among them reductions in transfers to capital reserves, use of a significant 2019 surplus, and provincial-federal grants to cover additional expenses and lost revenue associated with COVID-19.
“Based on the direction provided and the assumptions that we’ve made, for 2021 we are showing about a 4.67 per cent decrease from 2019,” said Andrea Stuart, the Town of Banff’s finance manager.
“However, in 2022 and 2023 we do see larger increases as we try to claw back all those savings.”
Some councillors are already hinting that they would like to see deeper cuts, perhaps in the range of 10 per cent to 15 per cent, given the ongoing financial hardships businesses and residents are facing during the ongoing pandemic.
Mayor Karen Sorensen said there will be discussion and debate during service review on what council believes needs to be done, but thanked the finance team and all departments for the savings they did find for 2021.
“That’s not an easy thing to do when the community depends on our services, and I know there’s lots of different circumstances that may have got you there,” she said.
“I think every department has been creative to try to do that, and to show at this point a minus 4.67 per cent from 2019 is admirable.”
The property tax calculation was prepared using Alberta CPI of 1.4 per cent and the 2019 budget as a base for 2021, rather than the 2020 budget, which was revamped earlier this year due to COVID-19.
It is currently proposed Town of Banff employees will get an inflationary wage increase of 1.4 per cent, rather than the blend of an Alberta CPI and Statistics Canada formula normally used, which would be a 3.95 per cent increase.
The draft budget also includes new staff positions, which were previously approved during council’s 2019 and 2020 review of municipal services and programs prior to the pandemic hitting.
The legislative advisor was meant to start in 2020, but was delayed until 2021 during the revamp of the 2020 budget due to COVID-19. The communications coordinator and HR/HS position were budgeted to start during 2021.
With varying and delayed start dates for the three positions, 2021 would see a total of $114,400 needed to fund the three positions, but move to $190,824 in 2022 and $195,585 in 2023.
Stuart said the workload in all three of these areas has increased substantially due to updated legislation, as well as safety and communications requirements.
“With the current pandemic and an election in 2021, these positions remain crucial to the functioning of the organization,” she said.
Councillor Peter Poole said he expects some members of the public will want to see cuts to the municipality’s wages and benefits line, which was in the order of $15 million and $16 million in 2018 and 2019.
“Those sorts of decisions are happening throughout most businesses and most non-profits in our community,” he said.
“I think some members of the public will be asking us, ‘what would a five per cent, or even conceptually, a 10 or 15 per cent drop in our wages and benefits line look like?’ ”
Town Manager Kelly Gibson said he can present those numbers at service review.
“It is important to convey if we were to do something on the magnitude of that extent, that there would be substantial reductions in probably multiple service areas,” he said.
Coun. Poole said he would like administration to think about what 10 per cent reduction in the overall budget would look like conceptually in preparation for service review.
“That is in keeping with what the businesses that have done better this year are facing, and a 10 per cent drop is what many people are facing in all sorts of areas of their life,” he said.
“I think as we go into our budget season we have to ask ourselves what can we live without for a year.”
Without specific direction from council on where to cut, Gibson said administration would look at further reductions in transfers to capital reserves or debt-financing options.
He said there are also options for additional revenue opportunities for the Town of Banff, such as paid parking, which is back on the discussion table during service review.
“I know our goal is to put that directly into services, but in a year council is looking to reduce budget, that will be an opportunity that can be discussed during service review,” Gibson said.
“There are other options than just cutting services.”
In preparing the proposed 2021-23 operating budgets, some of the assumptions made by administration included:
• COVID-19 emergency response budget in 2021 of $240,000 to cover COVID-19 safety ambassadors ($55,000), COVID communications ($175,000) and general personal protective equipment ($10,000) for the first nine months of 2021 to be funded from the economic recovery reserve;
• Transfer of $70,000 in 2022 from the transit operating reserve funded by the $414,747 transit portion of a provincial-federal Municipal Operating Support Transfer (MOST) operating grant to offset lower fare revenue expected due to COVID;
• Transfer of $98,000 from the economic recovery reserve in 2021 and $25,000 in 2022 to offset reduced Fenlands ice, curling and room rental revenue losses expected due to the pandemic;
• Transfer of $227,500 from the resource recovery rate stabilization reserve in 2021 and $70,000 in 2022 to offset the reduced resource recovery utility revenue expected due to COVID-19;
• Reduction in the transfer to the water capital reserve of about $600,000 in 2021 and $300,000 in 2022 based on anticipated lower utility revenues because of the pandemic;.
• Reduction in the transfer to the sewer capital reserve of approximately $1.4 million in 2021 and $700,000 in 2022 based on anticipated lower utility revenues due to COVID;
• Implementation of a target wage and benefits overall savings of an additional $100,000 in years 2021, 2022 and 2023;
• Implementation of a training saving target of $30,000 in 2022 and $25,000 in 2023. The training budget for 2021 already has been reduced in anticipation of minimal travel for training in 2021 due to COVID;
• Use of the 2019 operating surplus of $600,000 remains unchanged per the 2020 COVID budget with $300,000 used in 2020 and $300,000 used in 2022;
• The additional 2019 surplus of $687,492 that was originally intended to be used as $343,746 in both 2020 and 2021 fiscal years is proposed to be used as follows – $343,746 in 2020, $77,250 in 2021, $160,814 in 2022, $101,004 in 2023 and$4,678 in 2024.
“The intention of spreading out this portion of the 2019 surplus is to move additional funds forward in order to lessen the impacts to tax increases in future years,” Stuart said.
Administration will publicly release the service review and budget documents on Jan. 4. Council’s review of services, programs and projects ahead of final budget decisions kicks off on Monday, Jan. 18, at 9 a.m.
