The expected tax rate increase is 5.6 per cent for both 2025 and 2026. Cammeraydave/Dreamstime.com

By Eli J. Ridder

WHAT TO KNOW

Tax rate, Medicine Hat energy profits down: Here’s what to know about the budget

Nov 14, 2024 | 11:06 AM

Medicine Hat city council’s process to approve its next two-year budget is entering the final stretch.

The last round in a set of four consecutive weekly budget deliberation meetings wrapped up Wednesday evening, with a focus on real estate and land assets.

Other meetings focused on utilities and municipal costs, among other aspects of the operating and capital budgets.

Officials say it’s been the most public and transparent budget process in Medicine Hat’s recent history.

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The supervising accountant leading council through the 2025-26 budget, Aaron Hoimyr, said this year the amount of time spent deliberating on the budget in public is triple that of past budget processes.

“In previous budget cycles, we would have spent approximately about seven hours worth of time in an open setting talking about budgets,” Hoimyr told CHAT News on Wednesday.

“This year will be over 22 hours talking about budgets in an open setting. So that’s a incredible increase in the level of transparency.”

Tax rate increase

The tax rate increase for both 2025 and 2026, at this point in the budget approval process, is at 5.6 per cent.

That number could change if council decides to make cuts to capital or operating expenses.

The final budget will be passed in December.

Council on July 15 asked staff to find savings, which they did. The total capital ask was reduced by $12.8 million and operating by $2.8 million.

However, low energy business profits — made through utilities charged to residents and by selling energy externally — meant that costs remain the same.

Utility rates

There are three key elements impacting utility rates.

The first is the new water residuals treatment plan that will activate in 2025, a $33-million facility the City of Medicine Hat was required to build to stay up to code with new environmental standards.

Within the city’s electric and gas distribution, changes to weather and more energy conscious customers have resulted in lower volume assumptions.

And thirdly, within the city’s gas distribution division, expenses have increased as the city’s own gas production has decreased. Tariffs are increasing and mitigation opportunities are diminishing.

However, when it comes to the city’s solid waste rates, there’s good news.

The Alberta government introduced a new program that essentially shifts the costs related to recycling wate to the producer and away from taxpayers — resulting in savings the city is able to pass on to the ratepayer.

The municipality’s revenue requirements for municipal consent and access fee will result, on average, in a minor reduction to the average ratepayer’s utility bill, staff say.

All this means that accounting staff are anticipating the average resident will experience a one per cent lift to their utility bills in 2025, compared to 2024.

For commercial customers, that number will be closer to five per cent and four per cent for industry.

That means Medicine Hat’s 2025 utility rates will be lower than the 2024 rates in Calgary, Edmonton, Lethbridge and Red Deer, officials say.

Next steps

Staff will return to council on Nov. 18 for a first reading of the utility rates bylaw.

At the Dec. 2 meeting, the full 2025-26 budget will come forward for council approval.