2014 year in review and looking ahead in the Crowsnest Pass

Looking back 2014 was quite a year, the first full year with this council a group of individuals that have come together and worked very well as a team. It's good to work with a group where everybody respects each other, and their different opinions.

We had many challenges, hate to use the term "legacy issues" because from 2011-2013 I sat in the vast majority of council meetings and heard that phrase thrown around again and again but we were left lots of them. Yes these "legacy issues" are a pain in the ass and they will continue for a while yet, lets remember lawyers don't get rich by moving fast.

I doubt very few municipalities have faced the challenge of having to rebuild their total administrative team right after an election. But we did, and now we have an administrative team that is working well together and moving us in the right direction. Even so we can not loose sight of the fact that they were not all in place until June, by the time they became familiar with all the issues in their individual areas the year was not far from over.

Budget for 2014 was a mess,  our CAO had to hire the rest of his team, run the municipality and try to build a budget with a brand new council, comprised of six members who have never worked through a municipal budget previously. So we basically took the 2013 budget renamed it the 2014 budget, and made sure there was no tax increase. Over the year we got some surprises little did we know that the 2013 budget did not include any dollars for gravel and salt for the winter season.

Between administration and ourselves we have rebuilt some of the relationships, the swimming pool is back being operated by the previous society and is doing well. We are working on resolving issues with the previous fire departments, we have a much better working relationship with CUPE and we just worked out a new agreement with the SPCA.

We are getting along with our neighbors we are no longer asking them to give up part of their properties and pay us to take it of their hands. Next week we are meeting with some of our neighbors to look at opportunities for us to work together.

The survey on the branding/logo was completed (for a cost of $200) nobody on council had the desire to spend another $330,000 dealing with this issue. But it was a big issue during the election and the public deserved the opportunity to voice their opinion and they did to the tune of almost 800 completed surveys.

Looking ahead 2015 is going to be filled with many issues that we have to deal with.

We have the Albert Stella Arena, we should be getting test results soon, which should provide us the information to move forward on this issue.

The budget process continues, Jan 8 2-5pm is our next meeting, if you have been following my previous posts you can see there is a lot that we have to deal with. I think everybody understands that our facilities, infrastructure and equipment fleets are all in dire shape. Unfortunately without acquiring a large debt load, and enormous tax increases we can not fix all of the problems in one year. No matter how much justification can be provided for everything on administration's list.
We are ultimately going to have to make tough choices and yes not everybody will be happy.

The great big unknown for us is the situation in Edmonton, our Premier as told us a number of times now that we are going to have a revenue shortfall of $6-7 billion. Not unlike us (just on a much larger scale) the province is going to have to make tough decisions and most people will not be happy. I will be shocked if the provincial dollars coming to municipalities is unaffected.

Our collective agreement with CUPE expires at midnight today and bargaining for a new agreement will begin soon.

We are hoping to have our budget process concluded by the end of January, then we will have to wait for the provincial budget and the ASFF before we can set our mill rate for the coming year. Even at that point council still has the option to change the budget if they so desire.

Both development and real estate sales were up substantially in 2014 hopefully that trend will continue.

For the first time in quite a few years there are indications that our assessment base is growing.

We have an economic development board that is bringing forth some good ideas on promoting our community.

I'm hopeful during the next year, that we reach out again for the public's input on important issues. For a relativity low dollar amount using our utility bills and municipal web site we have a great opportunity to improve the democratic process and allow the people that pay the bills to provide their input more than just every four years.


I'm sure there are things that I have missed, I am sure somebody will jog my memory.

Here's hoping that 2015 is a good year for all of us. Happy New Year






 

 

Why did my taxes go up?

Every year at this time we talk about taxes, the way we calculate our taxes in Alberta can be very confusing it takes a lot of time and effort to fully understand the process.

The taxpayers here over all are in a position this year of having no additional tax dollars taken out of their pockets than last year. Unfortunately that does not mean that nobody received a tax increase this year I will explain.

Tax rates in Alberta are set by the combination of two factors "Marketplace Assessment and Mill rate", each year our Assessor must determine the Assessment value of our whole community. He does that by factoring in the values of properties sold in the market place for the last twelve months. Due to the markets some years single family residential homes may be in demand, other years condos, country residential etc etc. In a nut shell values go up and down, and sometimes in some areas more or less than others.

This year our total municipal assessment base dropped 4% now to bring in the same amount of taxation dollars as last year the mill rate had to increase 4%.

So assuming that your property dropped in value the average 4% with an increased mill rate of 4% you would pay the same taxes as last year.

Some examples (Numbers may not totally equal due to rounding)

2013-$200,000 home x mill rate of 9.130963 that would equal $1826
2014-$192,000 home (4% drop) x mill rate of 9.4954 that would equal $1823
Virtually the same as 2013

Why did my taxes go up? I will use my own assessment as an example.

2013-$307,000 home x mill rate of 9.130963 that would equal $2803
2014-$303,000 home x mill rate of 9.4954 that would equal $2877 my taxes went up $74 why because my property only dropped in value by 1%.

Then I will give you an example of a person who's value went down more than the 4%.

2013-$155,000 home x mill rate of 9.130693 that would equal  $1415
2014-$146,000 home x mill rate of 9.4954 that would equal $1386 their taxes dropped by $29 because their value dropped more than the 4%


I hope I have explained this process, I understand it is complicated but in the simplest terms I can explain. The mill rate increased 4% if your property value decreased the average 4% your taxes stayed the same, if your value decreased less than 4% your taxes went up. If you value decreased by more than 4% your taxes went down.

Note: If you are really interested in the whole process of market place assessment you should read the following http://mgareview.alberta.ca/wp-content/upLoads/media/Market-Value-Assessment-and-Administration-Discussion-Paper.pdf

It is a little technical but it does fully explain the process, if you still have questions or concerns contact the Assessor Glen Snelgrove at 562-8833.
   

Notes from 2014 Budget Process Crowsnest Pass

Budget Update for 2014 from Saturday March 22

2014 Salaries and Wages 3% Increase
Employee Benefits 5% Increase
Insurance Costs 12% Increase

Assessment Base total 2.1% drop
Market values actually dropped 3.6%
But there was 1.5% of new growth

Taxes and Fees
Franchise Fees Zero Increase
Property Tax 3% Increase
Utilities 5% Increase

Positions
CPO reduced to one position as of May 1
New position of Manager of Corporate Affairs
(Primary duties HR)

Equipment
Equipment Purchases  (3) Light duty Trucks $96,000
Wheel Loader (1) $175,000
Sidewalk Maintenance Machine (1) $141,000

Infrastructure Upgrades
Frank Wastewater Treatment Plant Upgrade-New Clarifier
Cost $5,000,000 Grants $3,327,500 Debt $1,672,500
Sentinel Water Treatment Plant Operational Upgrade
Cost $495,000  Grants $152,000  Debt $343,000
SCADA Upgrades Cost $797,500  Grants $797,500
Bellevue Hillcrest Lagoons-Swamp Drain Restoration
Cost $575,000  Grants $575,000
Wastewater Collection Systems Video Inspection
Cost $39,500 Grants $39,500


Next Budget Meeting March 28 1 pm in Council Chambers

Crowsnest Pass The real numbers!

Last week I wrote about the bungled discovery of a 5.23% assessment base drop six momths into the budget process. http://crowsnestpasshome.blogspot.ca/2013/04/incompetence-creates-opportunity.html

Today we have a special meeting of council to see administrations recommendations to solve the $295,000 shortfall. Administration brings backs three options:

Option 1 Spending cuts of $295,000 including eliminating $100,000 for the York Creek Lodge Reserve, $57,000 by shutting the Albert Stella Arena, $52,000 eliminating banners and the rest in smaller cuts.

Option 2 Spending cuts of $193,000 and $102,000 raised from additional mill rate increases beyond the 2.5% placed in the original tri annual budget

Option 3 Spending cuts of $193,000 and $102,000 coming out of reserves.

After the presentation of these options and the explanation behind each, Council asked a series of questions including a number of areas in the budget that had seen substantial increases from 2012 to 2013 (Councilor Saindon asked some very good questions). At this point administration requested some time to get the answers Mayor Decoux recessed for thirty minutes.
At 3:20 the meeting began again CAO Thompson supplied the answers to the previously asked questions. At this point Councilor Saindon raised a concern about himself and the CAO working with different numbers. After some banter back and forth between administration and Councilor Saindon it appears that Council and administration were working with different numbers. Everybody is scrambling, to which the CAO requests that this debate be carried on tomorrow at the G+P meeting. Council will be supplied with the real numbers tonight.  
First the Assessment base was of by 3.23% now nobody is working from the same page never had a real debate on which option to move forward with.

Incompetence creates Opportunity

The debate rages in the Crowsnest Pass about potential 7.5% tax increases, created by the surprise announcement April 8^th that the Assessment Base had dropped 5.2% instead of the 2% that Council and Administration had been working with for the last six months.

Time to clarify things I have had a number of discussions since Monday with people that assume a 7.5% mill rate increase means a 7.5% tax increase. It does not, most people struggle to understand how our municipal taxes are determined in Alberta.

The mill rate is only half of the equation the other half is the assessed value, they are both very significant to the process but have to be measured together to determine the real

rate of taxation.

Take an average residential home in the Crowsnest Pass valued at $200,000 the municipal portion of the mill rate last year was 5.87.

The simplest way to look at that would be for every $1,000 in value you would pay $5.87 in property tax to the municipality.   ( 200 x $5.87 equals $1174)

Council throughout their much vaulted tri annual budget process took a position that the mill rate would increase by 2.5% a year. They boxed themselves into a corner, I am surprised that nobody in either Council or Administration figured this out.

Why? If they had stated there would not be a tax increase of more than 2.5% each year we would not be sitting here today having this discussion.

A closer look at their problem the mill rate going up 2.5% would have increased it from 5.87 to 6.02 which on that same $200,000 home would have raised the taxes 2.5% to $1204.

Nobody from either Council or Administration asked the question (at least not while I was there) what happens if the Assessment Base drops? (say 5%)

Now the tax on that same home that was valued at $200,000 last year at a mill rate of 5.87 even with a 2.5% increase in the mill rate this year, will be taxed at a rate of $1144 a drop of $30 from last year. (190 x 6.02 equals $1144)

Imagine a much worse case scenario if the Assessment Base had gone up 10% that $200,000 home last year hit with a 2.5% mill rate increase you would now be paying $1324 an increase of $150 over last year or a 15% increase, this is exactly why a commitment to a set mill rate increase does not work. Set Tax Rate absolutely.  

While this is good news for the taxpayers, what will council do next year if the Assessment base drops another 5% or even more. This mistake on the Assessment base and the fixation on not increasing the mill rate more than 2.5% has created a $300,000 shortfall this year.

What does Council do now? Well they can go back on their pledge, one of the fundamental planks of their tri annual budget and increase the mill rate 7.5%, the other suggestion which I feel is even a worse option would be to take $295,000 out of reserves.

I agree with Councilor Saindon’s motion to find 4% fat in the system and reduce it. It will be very interesting to see what recommendations administration comes back with. The $300,000 shortfall could be made up very quickly by looking at the level of administration we have built and the dollars we pay to maintain them. Let us hope Council does not reduce service levels and programs such as recreation when we are running a very expensive bureaucracy.

Other options I am sure are many. Maybe we do not need to send four members of our council to conventions or our Mayor to an Economic Development Conference when the EDO is going to be working under the CAO, maybe our Weed Control person could survive one more year without a new pickup. Maybe the Public Relations consultant will not be receiving any more tax dollars from the Crowsnest Pass.

Five key points to my post today:

·        This could have been avoided if the 5.2% assessment base had been projected much earlier in the budget process.

·        If Council/Administration had been aware that a 2.5% mill rate is not the same has a 2.5% tax increase

·        Committing to a tax rate increase of a certain amount works, committing to a set mill rate does not, this is one of the down sides to a three year budget.

·        If council sticks to its 2.5% mill rate increase we will get a tax break, not due to them making a brilliant strategic move here, more because they got caught with their pants down on the assessment base. It could hurt the taxpayers much more when home values begin to rise we got lucky this time.

·        The devil is in the details, if Council makes $300,000 in cut’s where they are made is the most important issue to the public. Little Johnnie’s mom will not be happy if her boy can not play Lacrosse on a Friday night, but two brand new pickup's are running all over town.   

Mumbling and Bumbling at the Eleventh Hour-2013 Mill Rate

Today at 3pm I attended a Special Council Meeting fully expecting to hear First Reading on the mill rate bylaw. 

The bylaw that drives the revenues, that operates the municipality, it's programs it's facilities and everything else that matters to us the taxpayers. 

Well after five months of intense debate, numerous meeting, two years of working on the tri annual budget and a Council commitment to not increase the mill rate by more than 2.5% per year we have a big oops.

Here at the eleventh hour we find out that the 2% reduction in the assessment base that administration and council had anticipated is really a 5% reduction. 

What does that mean in simple terms? a short fall of "$295,000" this year, what did administration offer as a solution to that short fall? Two options, one to take $295,000 out of reserves or two to increase the mill rate by 7.5%.  

What did council do, they voted to have administration come back with a 4% reduction in the operating budget despite administration claims that the budget has already been cut to the bone and that they would now have to look at reducing services and programs. Let`s not lose site of the fact that cutting the operating budget by 4% over a twelve month period is one thing by the time the mill rate is in place one third of the year will have gone by, in reality that 4% will become 6% over an eight month period. 

Timing-Council must give the mill rate bylaw three reading, which they have not been willing to do in one meeting so they have to find $300,000 in savings and schedule another special meeting between now and next Tuesday the 16th.  If third reading is not done by the 16th bills will not go out on time, (April 30th) the province requires that  residents have 60 days from the date of billing to pay their bills. Administration claims that somewhere between 65-70% of our residents pay their taxes in one payment at the June 30th dead line. Which means if the bills are late the municipality runs into a cash flow problem at the end of June.

Can you believe that we are in this position on April 8th after five months of the Budget process.