The City of Red Deer’s sobering financial picture shows “we need to change our path forward,” said city manager Tara Lodewyk on the first day of 2024 budget talks.
The unsustainability of the current course was made evident on Tuesday by numbers showing the City of Red Deer’s tax supported operating reserves fell to $9 million by the end of 2022 from $40 million at the end of 2020.
Most of the reason for this has to do with the pandemic, when city councillors sought to keep taxes down to avoid adding to the financial burden for households. But the ensuing years of zero tax increases ate into the city’s savings, noted Mike Olesen, general manager of growth and finance.
At the same time, Red Deer’s revenues have not rebounded as quickly as expected from pandemic slowdowns. The $16.1 million shortfall has resulted from higher than anticipated inflation and lower than expected returns from city user fees, permits and government grants — which have declined.
Olesen showed the revenue target was missed by $3.5 million. This was mostly due to less revenue than expected from Alberta Heath Services for the city’s emergency dispatch and also because of a decline in parking revenues. Previously approved projects and budget amendments for 2024 are meanwhile costing the city more, stated Olesen.
Council will be looking at service reductions to reduce the budget in the shorter-term. But Lodewyk cautioned targeted studies will be needed so that rash decisions aren’t made and later reversed after public complaints come in about not having certain transit routes or lane swimming times, for example.
Olesen believes Red Deer’s city services are likely where they need to be for a city of 100,000 people, but he admitted some considerations will be needed.
For the longer term, he said this city needs to boost its revenues through greater growth and development, he added, noting the local economy is lagging behind that of many other Alberta cities.
Job statistics shared with council show employment in primary industries in Red Deer fell to 3,450 in 2021 from 5,010 in 2011. This amounts to a 25 per cent reduction in jobs in agriculture, mining and oil and gas extraction.
Tourism-based employment also fell by about 14 per cent and industry-based jobs were reduced by nearly 10 per cent. Total employment in Red Deer is down by 13.6 per cent since 2011.
Olesen told council a priority is aligning with the Red Deer and District Chamber of Commerce and Red Deer Polytechnic to discuss who else to bring to the table with the joint goal of working collaboratively to strengthen the local economy by attracting new businesses and helping existing Red Deer companies to expand.
Mayor Johnston rhetorically asked the rest of council to contemplate what makes the owner of a major company move his business to a certain city? He answered it’s a combination of economic and labour forces and amenities that the community has to offer, including arts, culture, recreational opportunities, parks, etc. “Let’s keep our eye on the prize and make this the best Red Deer,” he added.
City budget deliberations are expected to go until Friday at city hall.