As barrel dries, city looking to make cuts
Preliminary budget discussions could include folding energy division profits back into the municipal budget when council takes up the issue in late June, Mayor Ted Clugston told reporters after Tuesday’s council meeting.
Conversely, councillors will also discuss the possibility of major program cuts, he said, mostly avoided during the first two years of a so-called Financially Fit for the Future that aims to eliminate a major gap caused by low power and gas revenue.
“You’ll see some predictions and ideas for cost containment, and some things come forward that are contentious,” he said. “Our staff has been telling us that there’s no more room to find efficiencies — if you want to cut costs it’ll be with service levels, that we’re cutting the grass as best as we possibly can.”
The 10-year Financially fit budget strategy seeks to make up $23 million in the city budget, formally covered by gas dividends. It was launched two years ago with a public feedback survey that proposed adjustments often described as perhaps mowing parks twice per month as opposed to every week.
It calls for cost containment along with higher taxes, fees and other revenue, and using reserve cash to make up the difference.
The city’s next four-year budget cycle, covering 2019 to 2022, will be introduced next January.
The goal is to cut a $16million annual budget gap this year, to about $3 million over four years.
Clugston’s comments came after administrators presented an unrelated report into snow and ice clearing and road maintenance that shows the Hat spends less than many other municipalities per kilometre of roadway.
In that vein, the argument could be made to increase service levels, add to a snowclearing program, for example, said Clugston.
A positive however, is that the city’s powerplant is now expecting increased profits in at least the medium terms as power prices rise and two major new customers — Hut 8 data processing and the Aurora Cannabis plant — come online in the next year.
“The first assumption is that we’ll get off of commodity income, but that’s hard when citizens own the utility and expect a dividend. I’m expecting a tough conversation in two weeks.”
Coun. Phil Turnbull, the utility committee chair, discussed reintroducing dividends to municipal budgets shortly after last fall’s election.
Major cuts were brought to council for approval in late 2016, leading to the closure of the Medicine Hat Arena and Heald Pool in Riverside, both of which operated with large deficits and were in need of repair.
It also produced a review of transit and mandate to staff to alter the service with a savings of about $650,000, though council voted to return old routing when changes proved largely unpopular.
Administrators have said several times in committee meetings this spring that service level adjustments will be discussed later this year.
The current process to update the city’s long-term development plan includes suggestion that variable levels of service be brought in to new subdivisions. That is seen as one way to spur development without adding tax burden or utility costs to all residents.