WESTLOCK — This budget season is a very challenging one for Westlock County, made especially difficult by a proposal to change linear assessment models which, despite being on hold, only makes things less certain.
Councillors met with a contractor who is working with administration on a new budget process Sept. 16 in a closed session of the governance and priorities meeting. They expect to be signing off on the 2021 budget some time in November.
“We take it very seriously, we’re ratepayers as well so we want to make sure that (the budget) is good for everyone,” said reeve Lou Hall Sept. 18.
But, she added, “I think this year is the hardest.” She listed COVID-19, unpaid oil and gas taxes and policing costs as “compounding factors,” added to the provincial government’s proposal to change how oil and gas properties get assessed.
The four options would lead to decreased assessed values and, in turn, the amount of property tax they pay. (See Page 7). Public outrage from the Rural Municipalities of Alberta, its members and their neighbours has stalled implementation. But it also left municipalities in the dark until at least mid-October.
“We’ll have to try to figure out, OK if this model is implemented for 2021, then if that model is implemented, what’s the impact on our budget? And it’s huge. It’s serious. That’s the best way I can put it to you,” said interim CAO Rick McDonald over the phone Sept. 17.
RMA expects that on average, a municipality could stand to lose 14-24 per cent of its assessment base. According to the county’s 2019 audited financial statements, 42 per cent of last year’s net municipal taxes — excluding requisitions like school and senior housing payments — came from linear and industrial properties.
Any cuts to that 42 per cent paints a dire picture of what could happen to revenues. Back in August, a county estimate showed that if assessment changes go through, residential taxes could go up 24.1-31.3 per cent, and service cuts would also likely happen.
“What has been going on here in Westlock is not necessarily a spending problem, it’s a revenue problem because most of the capital work being done in Westlock County is done through grants. Our tax revenue is just paying to administer, basically. When you look at now knocking off a big piece of that, it is serious, and either you have more revenue, or you have less services,” added McDonald.
The county spends between 42-45 per cent of its operating budget on transportation — “$3 million plus just for gravel,” said McDonald” — which means “there’s not a lot of room.”
“Roads is certainly important, and we always have to go through that. That’s our biggest budget item,” said Hall.
“But we have to look at everything, I think we’re going to be doing a very in depth look of every bit of money that we pay out, and every bit of money that we receive and how we can make it work for the county. That’s our job.”
And that’s the purpose of this new process, which will move the county away from using previous budgets for future years.
“What we’re trying to do is look at it from a zero base. Where are we at, what kind of functions do we need to do, and what is the narrative behind those? If there’s a change, why is there a change? What does it mean to be a change?” said McDonald.
“So every department is now charged with giving me, over the next little while, a functional summary. What is it you do? We will put numbers beside it and put those narratives before council so that council, when they have to make tough decisions, know the impact.”
He expects that’ll take about two to three weeks, so by the middle of October, councillors will have an idea of how each department is spending money.
“Are we up for the challenge? We have no choice. We have to balance our budgets, we’re not allowed a deficit budget, so we will figure out what this means for the county and what it does to service levels, then give that information to council and the council has to make really tough decisions, really tough ones,” said McDonald.
While the process is new, reeve Lou Hall does feel some level of comfort in the fact that it’s council’s third year in office.
“We’re very familiar, in the past, with what we’ve had to deal with,” she said.
“This year, we’re going to have to make some changes and perhaps some cuts. I feel more comfortable going in, because we’ve had a couple of years of having to do it, but you’re still apprehensive until you get final numbers, it’s never a done deal.”
