By Leah Murray

City moving to four year budget cycle despite some push back

Mar 6, 2018 | 3:35 PM

MEDICINE HAT – Some on city council are raising concerns about moving to a four-year budget cycle.

With council terms having moved to four years, city staff say three-year budgets will no longer work.

The three-year cycle would leave a new council scrambling to develop a budget in mere months without any training or a feel for the council process. While that wouldn’t be so problematic for veteran councillors, it could be detrimental to those who are new to the process.

A four-year budget, which would be developed at the end of the first year, would extend into the next term, giving the next council a change to adjust.

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However, Councillor Julie Friesen says she’s concerned about trying to plan too far into the future.

“I feel there’s so many changes within a four year window of time that it’s too long for a budget cycle,” she said. “I think it’s fine to have a four-year plan, but I think the budget window needs to be shorter.”

She said her biggest issue with the four-year budget is the number of changes that would need to be made if economic conditions shifted.

“[Taxpayers] not really certain how much money we will be spending. Will there have to be a lot of amendments? I don’t know the answer to that, but there certainly could,” she explained.

Mayor Ted Clugston said he understands the concern, but the four-year budget would work better for staff.

“I know how laborious the budget is for staff, they spend months and months and months [on it],” he said. “If they can do it once and tweak it once a year, they can spend their time on other functions, like finding cost savings.”

Clugston admits changes would likely have to be made, but that has had to happen within the three-year plans as well.

“Perhaps we predicted assessment growth is going to be one per cent a year and it ends up being four or five because of new development,” he proposed. “That would be a good thing, but also unpredictable. So, I don’t mind making those little tweaks that we couldn’t possibly foresee.”

The big issue, he said, is if projects run over budget or, because the city owns its own utilities, if there are big drops in commodity prices.

“If you do a project, say for a million dollars, and it comes in at t$2 million and you have to find the money for a cost overrun or something that wasn’t foreseen, that’s what really irks the public,” Clugston said.

The city will be moving forward with the four-year budget cycle which will run from 2019-2022. City staff are still in the planning stages.

Frisen along with councillors Robert Dumanowski and Jim Turner, voted against the information item to show their disapproval of the move to a four year budget.

With finances listed as a top priority of council, city staff say they will need to be honest and realistic about the challenges of the budget.

A market crash and low commodity prices led to a $23 million revenue shortfall in 2016.

The 2017-2018 budget identified $7 million of service level reductions, cost containment and increases in fees and taxes, reducing the gap to $16 million.

The city warns that in order to maintain high service levels, residents should expect that taxes will have to go up to help make up part of the remaining shortfall.