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City facing serious capital funding challenge

Whether it's a municipally owned utility company or something else, St. Albert is searching for a solution to cover a yearly $16.2-million shortfall to run the city all on its own.
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Whether it's through a city-owned utility company or something else, St. Albert is searching for a way to cover a yearly $16.2-million shortfall to run the city all on its own.

The deficit is primarily in the area of repairing, maintaining and replacing city assets and infrastructure like facilities and vehicles. A presentation during Monday’s governance, priorities and finance meeting found outside grants cover more than 60 per cent of those expenses.

The city's ultimate goal is to have repair, maintain and replace (RMR) projects fully funded by property taxes, but there has been no definitive answer on how to do that.

Stephen Graham, the city’ s senior business analyst, said there’s a roughly $16.2-million deficit the city is facing and if the plan was to close that gap 100 per cent within five years, property taxes would have to go up by 3.2 per cent per year.

That idea didn’t spark much enthusiasm around the council table, a fact Graham noted.

“There’s probably no appetite for that. I get that,” he said. “This is likely going to be a long-term issue. So what if we went to 20 years? Now we’re getting a little bit more acceptable. It’s still significant but the reason I wanted to show this is because I wanted you to understand the scope of what we’re dealing with.”

At the moment, a number of city assets aren’t covered by a replacement plan and require so much money already that there’s little left for future growth. On top of this, the city still has to deal with a $349-million financial gap in its 10-year growth capital plan.

Graham said the city is facing a serious capital funding challenge.

While there are no quick fixes, some ideas were thrown out, including a suggestion by Mayor Cathy Heron to remove the city’s debt from the funding formula. This, Heron argued, could make the issue more transparent as a separate line item on tax bills.

“I would like to see debt taken right out,” she said. “If our funding formula is at $13 million and we’re taking on debt for Ray Gibbon Drive and we’re maybe taking on debt for a rec facility, there’s going to be no more room in that formula for anything, not even lifecycle.”

Coun. Sheena Hughes pointed out the city is really only exploring one option right now to deal with these financial gaps, which is a municipally owned utility company. A report looking into the feasibility of delivering utility services – including water, wastewater, wastewater treatment and solid waste collection – through a St. Albert-owned corporation is expected to be released April 1.

Graham assured Hughes that when administration comes back in three months, other options will be presented to council in addition to the utility corporation.

“The money has to come from the same wallet,” Hughes said. “You are basically telling us that if we want to do the complete list including growth, it’ll be a substantial tax increase. Whether we want to pay for it through utility companies or whatever, it is still money coming from people’s wallets.”

Council heard one way to reduce the tax increase could be to look at the city's current levels of service, since that would reduce the amount the city would need to raise to cover the gap.

Coun. Wes Brodhead added the situation St. Albert is in isn’t unique to this city as many other municipalities across Alberta are facing funding shortfalls and eroding revenue streams.

City chief administrative officer Kevin Scoble pointed out that despite the gap, the city is in good financial shape with a low debt per capita, one of the lowest in the province, and low operating costs per capita.




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Jeff Labine

About the Author: Jeff Labine

Jeff Labine joined the St. Albert Gazette in 2018. He writes about city hall and municipal issues. Follow him on Twitter @jefflabine.
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