CANMORE – It’s been clear for the past 12 months the 2023 budget cycle would be one of the most difficult in recent memory.
But the stark reality hit home when a proposed tax increase of 12.5 per cent – or $3.5 million added in expenses to the budget – was outlined in the Town of Canmore’s 2023-28 budget and business plan in order to maintain a status quo budget for the coming year.
The grim number comes as record inflation, higher borrowing costs, increased service costs and decreased financial support from upper tiers of government will likely see several difficult choices being made by council over the coming weeks.
“The 2023-24 budget cycle really sheds light on the financial challenges faced by the Town, but also by the community and the country,” said Therese Rogers, the Town’s general manager of corporate services at the Nov. 8 committee of the whole meeting.
The potential double digit property tax increase will be reviewed by the finance committee in the coming weeks, before being sent to council for consideration.
For a home assessed at $800,000 under last year’s values, a 12.5 per cent increase would see roughly an extra $230 added to the municipal if passed.
However, that number is yet to be finalized until this year’s assessment is calculated.
Rogers told the committee each $281,000 added or removed from the budget translates to one per cent, adding the initial draft budget came in at a 20 per cent increase, but was whittled down to 12.5 per cent.
The main areas came from $875,000 in reductions of transfers to reserves, pay grid adjustments or performance increases of $200,000, recruiting costs of $100,000 and slippage of $120,000.
The original proposed ask for snow and ice control dropped by $100,000, a $600,000 draw from the tax stabilization reserve and Canmore Public Library reduced its ask by $48,000 for a total of $2.043 million for a 7.3 per cent reduction.
The return to a two-year budget allows for Town staff and council to get a better idea of the immediate impacts of the next two years.
Among the increases are RCMP costs due to Canmore’s population expanding past 15,000, meaning the municipality has to foot more of the bill, cost of living adjustments that are far higher than other areas in the country and a phased-in plan to increase Canmore Fire-Rescue staffing to improve response times.
Mayor Sean Krausert pointed out the majority of the costs are largely out of the municipality’s control as they continue to recover from a zero per cent budget increase in 2020 due to the COVID-19 pandemic, debt servicing and other uncontrolled increases such as insurance, contract services and RCMP increases.
“Everything else – all the additional revenue, all the additional expenses – result in a one per cent decrease in the budget,” he said. “That’s what this budget is all about, uncontrolled expenses, COLA, catching up from COVID and debt servicing. Everything else is a reduced budget.”
As a municipality, there are few sources of revenue with the primary one being property taxes. Other avenues are permits and fines, sales and rentals, grants from other levels of government and dipping into reserves.
Provincial legislation also prevents a municipality from running a deficit. Any expenses have to have a source of revenue for the coming year.
The Town’s zero per cent property tax increase in 2020 due to the COVID-19 pandemic ultimately led to a $1.2 million deficit in tax collection and impacted the revenue for years down the line. A staff report estimated that had 2020 not had a zero per cent tax increase the recommendation would have been 10.9 per cent rather than 12.5 per cent.
The budget plan outlines an extra $5.5 million – or 12.2 per cent of the budget – is needed to fund the Town’s tax-supported services at status quo levels. It estimates an extra $3.1 million is needed for 2024.
The Town has a tax stabilization reserve to dip into to mitigate increases, and $600,000 is recommended for each of 2023 and 2024 to help with an increase in RCMP costs and increased staffing for Canmore Fire-Rescue.
Ten new part-time and full-time positions are being proposed in 2023 and three in 2024. Among the positions for 2023 are a parks planner, development planner and community development engineer, some of which are funded from sources outside tax collection such as reserves.
A staff report also estimated about $3.53 million in provincial downloading is impacting the Town’s bottom line in having to take more service delivery responsibility from the Alberta government.
The Town is also responsible for collecting the education tax, which is decided by the province.
PROPOSED TAX INCREASE
- 2023: 12.5 per cent
- 2024: 5.6 per cent
- 2025: 5.7 per cent
- 2026: 3.1 per cent
BUDGET SUMMARY
- 2022: $61.46 million (net budget), $28.13 million (municipal taxes)
- 2023: $67.9 million (estimated net budget), $32.03 million (estimated municipal taxes), $35.9 million (estimated non-tax revenue)
- 2024: $71.98 million (estimated net budget), $34.21 million (estimated municipal taxes), $37.8 million (estimated non-tax revenue)
ESTIMATED OPERATIONAL EXPENDITURES
- 2022: $61.5 million
- 2023: $68 million
- 2024: $72 million
SIX-YEAR CAPITAL BUDGET ESTIMATES
- 2023: $36.83 million
- 2024: $22.29 million
- 2025: $23.89 million
- 2026: $36.78 million
- 2027: $33.89 million
- 2028: $13.53 million
- TOTAL: $167.22 million
ADDITIONAL ESTIMATED REVENUE IN 2023
- An estimated $400,000 in new growth
- Paid parking is budgeted to have $1.2 million in revenue for a $405,000 increase
- Recreation services are projected at 3.9 million for a $175,000 increase
- Increased franchise fees from ATCO Gas and Fortis Alberta are estimated to increase by $182,000
- Permit revenues are projected to increase by $253,000
ADDITIONAL ESTIMATED REVENUE IN 2024
- An estimated $400,000 in new growth
- Paid parking is budgeted to have $1.2 million in revenue
- Recreation services are projected at 3.9 million
- Increased franchise fees from ATCO Gas and Fortis Alberta are estimated to increase by $108,000
- Permit revenues are projected to increase by $249,000
ADDITIONAL PROJECTED EXPENSES IN 2023
- Insurance costs are estimated to increase by $135,000 to $900,000
- Bank fees are projected to increase by $67,000
- Professionals fees are budgets to jump by $275,000
- RCMP costs are expected to increase by $295,000
- Roam transit Canmore requisitions are estimated to increase by $267,000 to $1.8 million
- Contracted services are estimated for an $100,000 increase
- Cost-of-living increase is projected at $1.15 million
- Extra staffing for Canmore Fire-Rescue is budgeted at $309,000
- Increases in CPP, EI, benefits and short-term disability could see a $288,000 increase
- Debt servicing is projected to increase by $300,000 with borrowing rates significantly higher
ADDITIONAL PROJECTED EXPENSES IN 2024
- Insurance costs are estimated to increase by $50 to $950,000
- Bank fees are projected to increase by $9,000
- Professionals fees are budgets to jump by $84,000
- RCMP costs are expected to increase by $436,000
- Roam transit Canmore requisitions are estimated to increase by $42,870 to $1.84 million
- Contracted services are estimated for an $272,000 increase
- Cost-of-living increase is projected at $563,000
- Extra staffing for Canmore Fire-Rescue is budgeted at $124,000
- Increases in CPP, EI, benefits and short-term disability could see a $300,000 increase
- Debt servicing is projected to increase by $289,000 with borrowing rates significantly higher
RECOMMENDED RESERVE FUND TRANSFERS IN 2023
- A $600,000 transfer from the tax stabilization reserve to offset RCMP costs and Canmore Fire-Rescue staff increases
- The development application reserve is proposed for a $315,000 transfer to cover a development planner and community development engineer
- The photo radar reserve is budgeted to see a $268,000 transfer to cover 1.5 RCMP positions and community safety initiatives
- A contribution of $243,000 is recommended to the photo radar reserve
- The art trust fund reserve could see a draw of $31,000
- An estimated $70,000 may be transferred to the art trust fund reserve
- The paid parking reserve is recommended to have a $474,000 transfer
- A $250,000 transfer to the asset rehabilitation/replacement and flood mitigation reserve is recommended
RECOMMENDED RESERVE FUND TRANSFERS IN 2024
- A $600,000 transfer from the tax stabilization reserve to offset RCMP costs and Canmore Fire-Rescue staff increases.
- The development application reserve is proposed for a $315,000 transfer to cover a development planner and community development engineer.
- The photo radar reserve is budgeted to see a $278,000 transfer to cover 1.5 RCMP positions and community safety initiatives.
- A contribution of $243,000 is recommended to the photo radar reserve.
- The art trust fund reserve could see a draw of $63,000.
- An estimated $102,000 may be transferred to the art trust fund reserve.
- The paid parking reserve is recommended to have a $465,000 transfer.
- A $250,000 transfer to the asset rehabilitation/replacement and flood mitigation reserve is recommended.
