CANMORE – An update to the Town of Canmore’s long-term financial strategy is set to be on the books for 2024.
Canmore’s finance committee recommended Town council approve the update when it considers passing the municipal budget Dec. 5.
First approved by council in 2017, the long-term financial strategy outlines the importance of making reserve contributions to support and maintain capital infrastructure projects in the municipality and identifying where there are possible funding gaps.
With the Town having $1.1 billion in assets, an updated long-term financial strategy is needed to determine the necessary reserve contributions to both maintain and potentially replace infrastructure, Town staff emphasized to Canmore’s finance committee.
“When we commit the funding to ongoing maintenance and rehabilitation at regular periods, it saves us from waiting until the condition of the asset erodes to fail and needs to be fully replaced,” said Whitney Smithers, the Town’s general manager of municipal infrastructure during finance committee’s budget talks earlier in November.
“That’s significant not only from a funding point of view, it’s exponentially more expensive to replace infrastructure than rehabilitate it and provide regular maintenance. For a lot of our assets, it’s also a public safety concern. We don’t want to get to the point where many of our assets are at the condition where they may fail because there’d be public safety implications.”
In a presentation to finance committee Nov. 2, Smithers outlined the Town has $450 million in tax-supported assets and $650 million in utility-supported. Among assets are buildings, facilities, roads, parks and vehicles.
She noted over the next five years, the asset replacement and rehabilitation reserve should have annual contributions of $6 million “to be able to keep up with lifecycle, maintenance and rehab and replacement schedule that aligns with good asset management practices.”
The utility reserves should be receiving $13 million a year – which includes what will likely be a more than $100 million wastewater treatment plant upgrade over the next decade – to fund and maintain future infrastructure needs.
“We need that consistent flow of contribution to reserves to be able to fund the lifecycle work when it comes up,” she said.
A presentation from Town staff showed from 2016-24, there was an annual funding gap to reserves of $5.85 million based on the needs outlined in the long-term financial strategy.
Therese Rogers, the Town’s general manager of corporate services, noted that getting to the level of recommended reserve contributions it ultimately means taxing at a certain level.
“This is what it costs to maintain the infrastructure that we have and the decisions that have been made over time to create or result in this gap have been decisions in the short-term to decrease an annual property tax increase,” she said. “The long-term impact or effect of that is this is close to $6 million. That’s not unique to Canmore. It’s a bit of a trade-off to how we’re planning today to plan to save for the future, but we can’t lose sight of the need for what we know is coming.”
Coun. Joanna McCallum, the longest-serving council member, noted when previous councils have looked for cuts to municipal taxes reserves are often the first place since it has the least immediate impact.
“That is an easy place to find money and then we keep kicking the can down the road as opposed to having the hard conversations that we need to have as a community if we want to have these things we need to pay for them and not expect future generations to do that,” she said.
While there had been cuts to tax increases in that period that led to fewer reserve contributions, the budget years of COVID-19 had the greatest impact. In the short-term, the council decision to have a zero per cent municipal property tax increase aided taxpayers struggling during the first year of the pandemic. However, it led to a greater need for tax increases down the line to make up the funding difference.
“We know it’s a chronic condition with councils all over the province and country to take away from the savings, because it doesn’t have the short-term pain, so you cut there and rob the future but now we are having to deal with the fact that future isn’t as far away as it once was and we have to find solutions to it,” said Mayor Sean Krausert.
The project summary for the long-term financial strategy highlights it would examine the Town’s current financial state as well as “assumptions, sensitivities and projections and then develops financial strategies to fund capital and operating going forward.”
If approved by council, a consultant would be hired to update the plan to ensure funding for future infrastructure needs is “complete and sustainable.”
“The updated LTFS will provide financial control enhancement and form part of a framework that will help guide future capital asset and budgeting decisions. Property tax-supported reserve contributions have an impact on the operating budget,” stated the project summary.
The project would take place in 2024 and is budgeted at $100,000. Finance committee recommended the funding come from the Town’s operating reserve.
Town staff raised the possibility the photo radar reserve – which annually funds 1.5 RCMP officers – is anticipated to be depleted by the end of 2025. With the reserve dwindling, finance committee was warned of the likelihood the 1.5 full-time positions would soon have to be covered by taxes.
The Canmore Community Housing requisition is set to increase by $250,000 in 2024 – to be covered by reserves – but recommended to be funded by taxes in subsequent years.
An Oct. 31 staff report to finance committee stated “funding ongoing expenses from unpredictable or unstable revenue sources is not recommended as a financial best practice. It would not be fiscally prudent to rely on such sources of revenues to build up a reserve to support an ongoing program.”
Throughout budget talks, Town staff raised issues of the ongoing pressures and challenges being financially faced by the municipality with increased cost-of-living adjustments, inflation and operating costs, but also decreased funding from upper tiers of government and increased power and natural gas costs.
A long-term financial strategy was first directed by council during the 2015 budget, with it being approved by council in 2017. The strategy was originally devised using the City of Calgary’s 2011 long-range financial plan as a framework.
It has five financial goals of flexibility, efficiency, sufficiency, integration and credibility, while eight principal strategy areas were identified such as ensuring adequate funding, managing expenditures and providing for contingencies.
It has the goal of looking at the existing state, assumptions and projections and creating financial strategies to fund capital and operating projects.
The funding will see a consultant hired to update the plan “with a focus on ensuring that estimates of future infrastructure expenditure requirements are complete and sustainable, and the volatility of funding and expenditures can be addressed, factoring in economic and operational factors and forecasts in order to be able to respond to changing circumstances.” sated the report.
