’Hat earns kudos for limiting spending
CITY NOT SURE WHERE CFIB GOT ITS FIGURES
Medicine Hat’s unique oil and gas production business has likely again thrown a curveball at analysts looking to compare municipalities — the latest giving the city an exemplary rating for keeping municipal spending in check.
On Dec. 24, the Canadian Federation of Independent Business released Alberta’s Municipal Spending Watch Report, comparing operational budgets of 182 cities, towns and counties in the province.
It pegged Medicine Hat as the 14th best for limiting operational budget increases, and singled it out as the only sizable city to be spending less per citizen than it did 10 years earlier.
The problem however, is officials with the city’s finance department are working to determine how that could be true.
To match the figures in the report, Medicine Hat would have had to cut its budget in half about 12 years ago.
“I suspect CFIB numbers didn’t fully isolate municipal services (from oil and gas exploration),” city corporate services commissioner Brian Mastel told the News.
He said the city has more recently put a high priority on limiting new spending, but figures in the report date back to 2006.
Officials with the business lobby group also say the figures appear to be incorrect, but say Medicine Hat — with its business units like the power plant, gas division and property development wing — is not an easy organization to evaluate against others.
Richard Truscott, a vicepresident with the CFIB’s national office, told the News his staff strives for accuracy and will revisit the issue.
“Medicine Hat has always had an asterisk at best because of the gas (department)” said Truscott.
“It truly is a situation of comparing apples and oranges, when all the other municipalities are just different type of apples.”
This year’s edition of the annual report compares operational spending to population growth from 2006 to 2016, the most recent year that information is available.
Overall, it found that local government operating budgets for municipalities of 1,000 or more people grew by 62 per cent over that time, more than twice the rate of population growth.
It excluded capital spending or amortization, its authors state, and removed power and gas utility operations because they are not uniformly provided by all local governments.
Still, there’s no immediately clear explanation why Medicine Hat’s specific spending chart shows a roughly 60 per cent one-year decline in spending in 2008.
Such a cut would require the equivalent of eliminating the fire, police and transit departments.
The initial hypothesis is that year’s figure is obscured by a coincidental change in municipal accounting procedures as well as the beginning of steep writedowns on the value of the city’s gas holdings. After the drop, the chart shows steadily increasing spending levels to the point in 2016 when population sits 12 per cent above 2006 levels and spending up eight per cent.
That leaves Medicine Hat at a net negative 4 per cent, and spending $1,658 for each of its 63,000 residents. That places it at No. 14 among 182 municipalities in the study, and just behind Chestermere among cities on the fiscally sustainable list, but ahead of 16 other major centres.
No. 61 Lethbridge was spending 17 per cent more at $1,919 per resident, and in No. 128 Red Deer, spending rose 52 per cent to $2,088.
Calgary and Edmonton were Nos. 91 and 93 respectively at about $2,100.
Truscott said taxpayers and especially businesses end up paying more when governments spend more.
“Generally, municipalities still have a lot of work to do to create a more sustainable spending path,” he said.
Officials in Medicine Hat say they are acutely aware of the need to keep expenses in check since a launching a new budgeting plan two years ago.
“The city remains focused on being fiscally prudent and this is reflected in city council’s Strategic Priority of Fiscal Responsibility. This means balancing breadth and quality of services with fiscal considerations in mind,” said Mastel.
Since 2016 the city’s finance department has been wrestling with a $23-million operating deficit caused by low gas profits. That has already shrunk to $16 million, and the recently passed city budget calls for another $9 million to be found partly through cost cutting and spending restraint by 2021.
Redcliff is top local spendthrift
Of the 182 municipalities examined in the study, the Village of Nobleford, north of Lethbridge, was best at keeping spending increases in line with growth. Okotoks was second, followed by Cochrane and Ponoka County.
Redcliff, at No. 13, placed one spot higher than Medicine Hat, having grown by 28 per cent over 10 years and its budget rising 38 per cent.
It spent $1,239 per citizen, an eight per cent increase.
Other locales in the southeast region were: No. 30 Bow Island, $1,259 per person, up 24 per cent; No. 43 Brooks, $1,359, up 32 per cent; No. 46 County of Newell, $2,489, down 13 per cent; No. 54 Cypress County $2,428, down 6 per cent; No. 68 County of Forty Mile, $2,376, up 1 per cent; No. 71 Taber, $1,759, up 28 per cent; No. 122 Oyen, $2,063, up 45 per cent; No. 178 Special Areas Board, $8,036, up 63 per cent.