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Municipalities need to cut spending before crying poor: Taxpayers Federation

Author: Franco Terrazzano 2020/08/19

The Canadian Taxpayers Federation is calling on municipalities to cut spending before threatening tax hikes, in light of potential changes to oil and gas assessments and municipal governments alluding to large tax increases to other properties as a result. As this document illustrates, municipalities should lower the tax burden for everyone by cutting spending.

Many of the municipalities threatening tax hikes spend more than the average Alberta municipality which is particularly important for taxpayers given Alberta municipalities are the second highest spenders among Canadian provinces. This also illustrates the potential for spending cuts in these municipalities. 

County of Newell

The county claims taxpayers could pay up to a 466 per cent municipal tax increase in 2021 if the province changes oil, gas and pipeline assessments. But the county still has work to do on cutting spending before it can justify tax hikes. The county would spend $4.7 million less every year if its spending were in line with the average of mid-sized Alberta municipalities.

Spending summary, County of Newell

County annual per person spending

$4,021

Average per person spending Alberta

$3,397

Percentage above the average

18%

Annual savings if spending equaled average

$4,694,976

Labour costs increase (2014-2018)

7% ($516,290)

Total employee compensation Alberta (2014-2018)

-6%

 

Cypress County

The county estimates the proposed assessment changes could result in a 16 to 22 per cent tax revenue decline and the county could lose as much as $7.8 million in year one. The county predicts this could mean tax hikes for families up to 181 per cent. Business taxes could increase up to 63 per cent. But the county still has work to do on cutting spending before it can justify tax hikes. The county would spend $5.5 million less every year if its spending were in line with the average of mid-sized Alberta municipalities.

Spending summary, Cypress County

County annual per person spending

$4,116

Average per person spending Alberta

$3,397

Percentage above the average

21%

Annual savings if spending equaled average

$5,508,978

County labour costs increase (2014-2018)

45.5% ($2,528,175)

Total employee compensation Alberta (2014-2018)

-6%

 

Rocky View County

Rocky View County has estimated that assessment changes could result in an eight per cent property tax increase for families and businesses. But Rocky View still has work to do before it can justify tax increases, such as addressing ballooning labour costs which increased by 25 per cent during the downturn. The county would save nearly $8 million every year by bringing its labour costs down to pre-downturn levels.

Spending summary, Rocky View County

County labour costs increase (2014-2018)

25.1%

Total employee compensation Alberta (2014-2018)

-6%

Savings if labour costs return to 2014 levels

$7,799,692

 

Red Deer County

Red Deer County estimates proposed assessment changes could cost the county about $4 million in lost revenue, resulting in property tax increases of nearly 30 per cent for other properties. But if the county merely brought its spending in line with average of Alberta’s mid-sized municipalities, the county would spend $12.7 million less every year.

Spending summary, Red Deer County

County annual per person spending

$4,050

Average per person spending Alberta

$3,397

Percentage above the average

19%

Annual savings if spending equaled average

$12,760,273

County labour costs increase (2014-2018)

28.2% ($2,819,354)

Total employee compensation Alberta (2014-2018)

-6%

 

Lacombe County

The county estimates proposed changes to property assessment could result in $2 million in less revenue and increase the residential mill rate by 39 per cent. But if the county merely brought its spending in line with the average of Alberta’s mid-sized municipalities, the county would spend $13.7 million less every year.

Spending summary, Lacombe county

County annual per person spending

$4,722

Average per person spending Alberta

$3,397

Percentage above the average

39.0%

Annual savings if spending equaled average

$13,704,475

County labour costs increase (2014-2018)

20.5% ($1,915,814)

Total employee compensation Alberta (2014-2018)

-6%

 

Starland County

The county estimates the proposed assessment changes could result in $2.6 million and $3.75 million in loss revenue and 200 per cent tax increase for farmers and families. The county would be able to afford the lost revenue from assessment changes if its spending were brought in line with the average in small Alberta municipalities.

Spending summary, Starland County

County annual per person spending

$8,267

Average per person spending Alberta

$3,797

Percentage above the average

117.7%

Annual savings if spending equaled average

$9,235,020

County labour costs increase (2014-2018)

17.6% ($782,904)

Total employee compensation Alberta (2014-2018)

-6%

 

County of Stettler

The county estimates that the proposed assessment changes could result in $3 to $4 million in loss revenue and require “drastic cuts to services” and “extreme tax increases.” However, if the county merely brought its spending in line with the average of mid-sized Alberta municipalities it would spend $4.4 million less every year.

Spending summary, County of Stettler

County annual per person spending

$4,199

Average per person spending Alberta

$3,397

Percentage above the average

23.6%

Annual savings if spending equaled average

$4,431,852

County labour costs increase (2014-2018)

10.0% ($670,975)

Total employee compensation Alberta (2014-2018)

-6%

 

Yellowhead County

The county estimates that the proposed assessment changes could mean a 350 per cent residential tax rate increase or 36.5 per cent business tax rate increase. But Yellowhead county needs to address its overspending before it can justify tax increases. Yellowhead County is the second highest spending mid-sized Alberta municipality and would spend $3 million less every year if its labour costs were brought down to pre-downturn levels.

Spending summary, Yellowhead county

County annual per person spending

$6,177

Average per person spending Alberta

$3,397

Percentage above the average

81.8%

Annual savings if spending equaled average

$30,566,100

County labour costs increase (2014-2018)

36.2% ($3,056,308)

Total employee compensation Alberta (2014-2018)

-6%

 

Northern Sunrise County

The county estimates that proposed assessment changes could mean residential mill rates would have to increase by about 200 to 500 per cent. The county estimates the changes could mean between $2.7 and $6.3 million in loss revenue in the first year. However, Northern Sunrise County is one of Alberta’s biggest spending municipalities and would save significantly more money every year than the cost of assessment changes if it brought its per person spending in line with the average in small Alberta municipalities.

Spending summary, Northern Sunrise County

County annual per person spending

$16,964

Average per person spending Alberta

$3,797

Percentage above the average

346.8%

Annual savings if spending equaled average

$24,898,797[1]

County labour costs increase (2014-2018)

15.9% ($999,259)

Total employee compensation Alberta (2014-2018)

-6%

 

Grande Prairie County

The county estimates it may need to hike residential or business tax rates by as much as 52 per cent and 15 per cent respectively to account for potential changes to oil and gas assessment. However, the county could find significant savings ($21 million) by bringing its spending in line with the average of mid-sized Alberta municipalities. The county would save over $6.6 million per year by bringing labour costs down to pre-downturn levels.

Spending summary, Grande Prairie County

County annual per person spending

$4,337

Average per person spending Alberta

$3,397

Percentage above the average

27.7%

Annual savings if spending equaled average

$21,151,880

County labour costs increase (2014-2018)

25.1% ($6,620,469)

Total employee compensation Alberta (2014-2018)

-6%

 

Municipal District of Greenview

The Municipal District of Greenview could see a 12 per cent reduction in revenue due to potential changes. Greenview spends $14,911 per person annually which is more than every other mid-sized Alberta municipality. Greenview would save nearly $5 million every year by bringing labour costs down to pre-downturn levels.

Spending summary, M.D. of Greenview

County annual per person spending

$14,911

Average per person spending Alberta

$3,397

Percentage above the average

338.9%

Annual savings if spending equaled average

$69,590,616[2]

County labour costs increase (2014-2018)

54.8% ($4,961,973)

Total employee compensation Alberta (2014-2018)

-6%

 

 Municipal District of Taber

The municipality estimates it would lose between $3.1 and $4.1 million due to the proposed property assessment changes. The municipality’s labour costs increased faster than any other mid-sized municipality since 2014 and the municipality would spend $3.1 million less every year by bringing labour costs down to pre-recession levels.

Spending summary, M.D. of Taber

County labour costs increase (2014-2018)

56.1%

Total employee compensation Alberta (2014-2018)

-6%

Savings if costs return to 2014 levels

$3,127,280

Sources:

The per person spending comparisons are based on government data in the CTF's 2020 Municipal Spending report: http://www.taxpayer.com/media/Municipal-Spending-Report-Alberta-2020.pdf?fbclid=IwAR06KFjkEeQrU2LTfQSUpfW6ywyJbLDRkIhK-PrTyyZClzWPAPy1W3Gd27I

The municipal labour costs increases are based on government data in the CTF's 2020 Municipal Labour Costs report: http://www.taxpayer.com/media/Municipal-Labour-Cost-Report.pdf

 

[1] The CTF is not proposing the county cut 75%+ of its budget, this is to illustrate how far above the average the county is and the potential for savings (especially before threatening massive tax increases).

[2] The CTF is not proposing the M.D. cut 75%+ of its budget, this is to illustrate how far above the average the county is and the potential for savings (especially before increasing taxes).