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EXPLAINER

What to know: Year-long budget process begins at Medicine Hat council, city’s identity at stake

Apr 24, 2024 | 3:37 PM

Medicine Hat city council has kicked off its journey towards determining the 2025-26 two-year budget.

Council enters the process with a city in good financial standing and with steady tax rate increases that have recently hovered around the four per cent mark, financial staff said.

While energy profits have boomed in the last few years, staff say much of that money is being saved for rainy days.

Those rainy days are likely to come in the next decade if the city’s energy profits decline as expected, reclamation costs rise for local oil wells and as property tax rates recover from a pandemic-induced plateau.

Staff say the budget theme sums it all up: “balancing the needs of today with the requirements of tomorrow”.

The preliminary process began Tuesday at a council committee-of-the-whole meeting.

The city’s accounting supervisor of budget and systems Aaron Hoimyr launched the budget deliberations with a presentation that started by going back into Medicine Hat’s history of gas wells and the launch of its city-owned utility in 1903.

Through history, “the town that was lucky” has found prosperity in its thriving energy and manufacturing identity, Hoimyr pointed out through his presentation.

“The city’s permanency can be attributed to is economic diversity, local ingenuity and the calculated risk-takers that compromise Medicine Hat residents,” Hoimyr said.

Through his presentation to council, Hoimyr laid out the challenges facing Canadian cities in this post-pandemic era including inflation, aging infrastructure, wage pressure, stagnant population growth and declining revenues.

While Medicine Hat is not immune to these issues, Hoimyr said the city is “financially healthy” as others face financial hardships.

Aaron Hoimyr, accounting supervisor of budget and systems, speaks to Medicine Hat city council on Tuesday. (Eli J. Ridder/CHAT News)

But the biggest challenge facing Medicine Hat is tied to its identity as the “Gas City” amid a future of unknowns.

“The natural gas wells that at one time were the pride of the city are now drying up, leaving an environmental responsibility for the city to remediate,” Hoimyr said.

Also, the federal government’s goal of having a net zero carbon emission electrical system calls into question the longterm profitability of the city’s electrical assets, staff say.

“We have always relied on these resources to help us through the hard times, but within the next decade the landscape for Medicine Hat could look very different,” Hoimyr told council.

Early estimates of future consideration are in the hundreds of millions of dollars, making the earnings of our energy business in the past few years seem rather inconsequential.”

Tuesday’s committee-of-the-whole meeting was just an introduction to the major themes and broad strokes of the budget.

Council will need to make choices that will determine how high the tax increase will be on residents and what projects the city will tackle in the next two years.

(City of Medicine Hat)

Council’s next budget meeting will focus on discussing the capital budget and take place June 25. Budget approval is scheduled for Dec. 2.