St. Albertans can expect to see a minimum annual increase of 1.5 per cent to their property taxes over the next three years starting in 2020.
For months, city council has been trying to figure out how to handle an approximate $16-million shortfall in repair, maintenance and replacement (RMR) of city assets, but the only solution that has been explored in depth is an increase to property taxes.
The city has been relying on grants from other levels of government to cover the shortfall but that’s considered risky since there’s no guarantee the money will be coming in at the same level each year.
Coun. Sheena Hughes made several passionate pleas to her fellow elected members on Monday while the increase was being discussed at council, but she wasn’t able to convince anyone to change their vote, which carried 6-1.
“This is actually an upsetting motion for me so I’m just going to try and keep it together,” she said prior to the vote. “There are a lot of people that can’t afford these tax increases being proposed. This isn’t a three-year tax increase, this is a three-year tax increase to put you past the next election and then we can keep it going indefinitely.”
The plan is that if the city increases property taxes by 1.5 per cent each year for 20 years, this should close the gap in funding. Mayor Cathy Heron limited that to three years so administration could look at alternative options. This could be anything, including a reduction in service levels.
Hughes tried twice to bring the increase down by first proposing a 0.75-per-cent increase at an earlier meeting and then one per cent at Monday’s meeting. Both ideas were shot down by the majority of council.
Heron tried to paint the picture that the city can’t rely on senior levels of government.
“There’s no ‘if’ regarding a decrease in other levels of government funding, especially provincial,” she said. “I’m telling you guys right now it’s going to be much less. We’re good for one year but after that, there’s going to be an uphill battle.”
In 2019, the city's 0.9-per-cent increase in property taxes equated to a $33 increase for an average St. Albert home valued at $450,000. If the 1.5-per-cent increase had been rolled out for this year, for example, it would have pushed the cumulative increase to 2.4 per cent, meaning owners of an average St. Albert home would have seen an increase of approximately $90.
Tax increases for 2020 will be discussed and set during budget deliberations later this year.
Coun. Jacquie Hansen said if the city doesn’t start addressing the funding gap now, the problem is only going to get worse.
“(It is) not the job of council to make things worse down the road,” Hansen said. “I believe administration is working on a number of projects to look at ways for us to bring in new revenue. I think that’s going to be key over the next three to five years. Hopefully, this won’t be as difficult a pill to swallow. We can’t rely on grants as much as we do.”
Coun. Ray Watkins likened what the city is doing to mortgage payments on a house, since this was originally proposed as a 20-year plan. He explained the city is facing a dual problem of declining investment and aging infrastructure, a problem happening across Canada.
He added the estimate for Canada’s infrastructure deficit is around $123 billion and growing by $2 billion annually.
“We can sit here on our hands or we can try to put some money away – like starting a savings account – to take care of these problems,” Watkins said.
Hughes plans to put forward one more motion asking administration to provide alternative options and capital funding strategies to reduce the tax increases from 2022 onward. She’s asking to have these recommendations come back to council by Feb. 28, 2021.