Just days after this year’s June 30 municipal tax collection deadline, Lac La Biche County council is already looking at next year’s tax collection. And for the first time in three years, tax hikes seem to be on the table.
The annual operating budget that not only funds capital projects and county services with over $60 million in taxpayer funds won’t be an easy one to assemble considering current economic and inflation challenges, said Zeeshan Hasan, the county’s manager of finance.
Looking forward, and in an effort to imporove what Hasan said will be a very challenging financial picture for 2023, councillors are already having to examine operating cuts, service reductions, tax hikes and service charge increases for residents.
“Historically, council has always given us the direction that ‘we don’t want to see a change in the tax rate for the future years’. However, based on the realities that we all face today, we know that it’s a difficult thing to achieve if we don’t want our services levels to change or our capital spending to change,” Hasan said.
Ultimately, to sustain county services, projects and county councils' vision for the community there is not enough revenue to do everything, said Hasan. Even though elected officials opted to not increase taxes this year for Lac La Biche County residents, financially it's inevitable that tax rates will have to go up, he added.
“We have to raise the taxes; we have no choice at this point,”especially considering inflation, fuel prices and the financial economic effects of COVID-19, he said.
Getting councillors on-side for the budget discussions very early in the process is needed, he said.
“For 2023, we want to set the stage right so that we are all in the same boat when it comes to expenses increasing and tax rates are likely going to increase next year.”
Tough decisions
While councillors and senior administrators for Lac La Biche County begin discussing possible options months ahead of budget deliberations, weighing every option to practice fiscal restraint before moving forward with tax hikes is vital, said Lac La Biche County Mayor Paul Reutov. He says that while raising taxes is a direct way to bring in more revenues to offset increased expenses, there will also be other options to help reduce the economic impacts all residents are facing.
“I don’t think a number can be thrown up today. As far as guiding principles I think raising taxes is the easy thing to do and it's on the table…let’s consider every option and also consider where things can be more efficient,” he said. “I think it will be a little bit of a more difficult budget to go through this year just based on the circumstances.”
However, considering the Government of Alberta has been informing the municipality since 2016 that they must get in line with provincial requirements of setting a 5 to 1 mill rate ratio between residential and non-residential tax rates, there has to be momentum, said the county’s finance manager. Currently, in Lac La Biche County the mill rate ratio is 5.89 to 1 between residential and industrial ratepayers.
Council doesn’t want to over-burden all ratepayers with one, big tax increase, said Coun. Lorin Tkachuk, recommending a slower — but definitive start to steady increases year over year.
“A small incremental increase should be expected from a municipality. Staying status quo for as many years as we have now—especially with COVID and all these other extraordinary circumstances—I think may have been too long.”
A concern he says will make the inevitable increase a hard pill to swallow for taxpayers while keeping the county’s economic and capital plans viable.
“As a council, our philosophy is for capital projects. We have roughly $20-$25 million a year that we put into capital projects, those capital projects then come with operating expenses afterwards,” that require more funding, he added.
With options on the table that will consider cutting a combination of community services and potential capital projects, a tax increase could help to continue to move the county’s vision forward, said Tkachuk. But a real plan to understand the situation is key, he said. Growth costs money, he added.
“I always hear ‘tighten our belt, tighten our belts and find efficiencies’, well, we’re adding to the operational budget every year by building swimming pools, by looking at marina projects. There are some projects that are hopefully saving on our operations — but not as much as those other things and services we are adding to the community,” he said.
Debt repayment
Additionally, covering over $20 million in loans to fund long-term projects like the $27 million state-of-the-art Aquatic Center and the recently postponed $16 million Main Street Revitalization plan, there are many angles to consider when guiding administration to supporting councils vision, said Hasan.
“For 2022, council gave us guiding principles that maybe considered for any strategic projects that effect the entire county,” which includes incurred debt from the $16 million Main Street Revitalization project and the $27 million Aquatic Center, said Hasan.
Deliberations
Administrative staff will return in the coming months and present preliminary budget options for the 2023 fiscal year to county council members. Additionally, county staff will run open houses to garner feedback from residents on what the 2023 Budget looks like so far beginning late this summer, Hasan said.
“Every time we do our budget we are certainly looking for efficiencies and we’ve taken notes on some of the comments that have been made. We’ll go back and discuss internally and make sure we are addressing all those items,” he said.
