Provincial infrastructure and operational funding for municipalities may be reduced under the upcoming 2021 budget, according to a recent letter Municipal Affairs minister Tracy Allard sent to the province’s mayors.
The letter comes as Sexsmith prepares for budget deliberations and follows previous provincial cuts to funding in 2020 that contributed to a rate increase in Beaverlodge this year.
“We’re going to try not to (raise rates), but we still have to keep our doors open,” said Beaverlodge mayor Gary Rycroft.
“It’s not where we want to be.”
Sexsmith mayor Kate Potter also expressed concerns about potential cuts.
“It puts us in a precarious position to have very few options but to raise taxes, which of course we don’t want to do,” Potter said.
In her letter, Allard cites “very challenging economic circumstances” as a reason for funding cuts.
“Resource revenues are lower than they were in the early 1970s, while expenses are higher than anticipated due to the need to respond to the COVID-19 pandemic,” Allard wrote.
“I strongly encourage you to make certain all of your capital spending is used to support critical infrastructure.”
Rycroft told the News last week he hadn’t received the letter yet, but having had conversations with local MLAs Travis Toews and Allard he was anticipating cutbacks.
“They basically gave a pre-warning to tighten things up, because the money is going to run out,” Rycroft said.
“It wasn’t a surprise ... when the environment is very good for work and industry, it’s still hard to get money out of the province, so when there is no environment for industry, it’s a lot harder.”
The MLAs didn’t give him a sense as to how much funding would be cut, he said.
“There’s austerity measures we can take to make sure we’re not spending any money foolishly, (but) we haven’t talked about cuts in any departments yet,” he said.
He said he’s uncertain at this time as to what “austerity measures” could be implemented and added he is hopeful cuts to town departments won’t be needed.
Beaverlodge council won’t be deliberating the 2021 budget until the first few months of the year, Rycroft said.
“By the time we do our budget deliberations we have a better idea of what our income will be, as far as grants go,” he said.
This year Beaverlodge residential property tax rates increased three per cent.
“The rate increase we had this year was just about dollar for dollar for what cuts in revenues from the province were,” Rycroft said.
In 2020 Beaverlodge saw its Municipal Sustainability Initiative (MSI) operating funding cut from $85,159 to $29,861, said Tina Letendre, the town’s acting chief administrative officer (CAO).
Additionally, the province also required Beaverlodge contribute $48,871 toward policing for the first time, with the expense set at $73,358 in 2021.
Meanwhile, Sexsmith CAO Rachel Wueschner characterized this year’s cut to MSI operating funds as “small.” For the past two years council has kept property tax rates unchanged.
Potter said she has received Allard’s letter.
“We feel we have been very careful with our budget already,” she said.
She cited a Canadian Taxpayers Federation study this year that shows Sexsmith spends $2,005 annually per capita, less than any other small town in the Peace country.
“It definitely presents a challenge if we know funding will be smaller, (and) it leaves us with very few options with our budget … but to raise taxes,” she said
Potter said the town is also facing new expenses, including in policing at approximately $50,000 and COVID response.
While Sexsmith is receiving a $270,299 federal and provincial grant under the Municipal Operating Support Transfer to cover COVID expenses and lost revenue, she called this a “short-term fix.”
Potter said she is uncertain how much funding will be cut and noted this uncertainty poses challenges to preparing capital budgets three years in advance, as the province now requires.
“It wreaks havoc with our ongoing budgeting and planning,” Potter said.
Council is going into budget deliberations soon, she said. She said council remains cognizant of spending and will look to find savings where possible, and she hopes to keep tax levels the same for a third year.
Leanne Beaupre, County of Grande Prairie reeve, also said she wasn’t surprised by Allard’s cautionary letter due to the government’s messaging since the beginning of the pandemic that revenues are down.
Beaupre said county staff will continue scrutinizing its expenses to see if capital projects can wait, looking at the life cycles of existing infrastructure.
The county is in “a good financial position” and can draw from reserves to support its expenses, she added.
Beaupre added county council is aware ratepayers are struggling and hopes to avoid rate increases.
Brad Quarin, Local Journalism Initiative Reporter, Town & Country News