Morinville town council has called for budget cuts to head off a tax hike that’s more than three times the one they set at budget time.
Morinville council passed first reading of its 2021 tax rates during its regular meeting April 27.
Council approved the 2021 budget last December on the basis of a one-per-cent tax hike, 1.5-per-cent growth, and two-per-cent hikes to the Homeland Housing (seniors) and education levies. Under it, the owner of a typical $332,696 home was expected to pay $24.99 more in municipal taxes, $17.24 more in school taxes, and $0.63 more in seniors tax, for a total increase of $42.86.
Consultant Graham Isbister told council that the town saw just 1.42 per cent growth last year, with market values decreasing 2.13 per cent. That meant the town was poised to take in $261,945 less tax than it expected, and had to make up for it either by cutting spending or raising rates. The seniors levy increase also came in higher than expected at 3.98 per cent. The province kept the school levy flat but changed how it allocated it between residential and non-residential properties, resulting in an increase for homeowners.
Council heard they would need to pass a 3.6-per-cent tax hike to fund the budget. Under such a hike, the owner of a typical $331,629 home would see their municipal taxes rise by $83.98, their seniors levy increase by $1.56, and their school tax elevate by $10.40.
The average homeowner would pay about $95.95 more in taxes this year under such a scenario – the cost equivalent of about 48 large Tim Hortons coffees.
Coun. Nicole Boutestein said she was frustrated council was just finding out about this dip in assessment now, given that administration sent out assessment notices in February.
“Now I’m looking at something and going holy moly, that’s a lot of money for us to ask of our residents.”
Mayor Barry Turner said it was “extremely surprising” to see this tax rate on the table, and said council would have to “bring all levers to the table” to address it.
In an interview, Turner said council is unlikely to approve a 3.6-per-cent tax hike, as that is far more than it had approved at budget time. Still, council also has to consider the effects of a smaller hike on services and the tax-supported deficit.
Council asked administration to come back with a list of potential budget changes that would address this change in the tax rate, one that includes the effects of the new recreation cost-sharing agreement with Sturgeon County and pandemic-related staff cuts.
They also asked for a report on the amount of revenue the town would lose if it increased its split mill rate to 1:1.2 by cutting residential taxes instead of raising non-residential ones.
The bylaw returns for second reading May 11.
The tax bylaw came on the heels of a report suggesting the town is in a tight spot when it comes to its finances.
Council received its 2020 audited financial statements earlier in the April 27 meeting.
The statements showed the town came out of 2020 with a $2.3-million deficit, which was about $1.6 million less than they had predicted at budget time.
Curtis Friesen of Metrix Group said most of this variance was due to the pandemic, which had resulted in unexpected revenues (such as roughly $1 million from the COVID-related Municipal Operating Support Transfer) and cost reductions (parks and recreation costs fell by close to $1 million due to staff layoffs).
“Your reserves are tight for sure,” Friesen said, and the town was carrying considerable debt due to the Morinville Leisure Centre.
“You’ve got $20 million in debt and you’re repaying $1 million a year.”
Friesen said the town would have to focus on ways to generate funds in order to cover its operating costs in the future.
In an interview, Turner said the town had a long-range financial strategy to address this deficit, but the pandemic had thrown a bit of a wrench into it.
“We’ve got a plan. It’s a reasonable plan, and when we come out of this pandemic, council will have to stick to it if it wants to see the projected results.”