The City of Estevan's years of boasting about having some of the lowest taxes in Saskatchewan are quickly coming to an end.
As was reported in last week's Mercury, City Council approved the 2014 general operating budget during an April 26 meeting. Among the highlights was a 1.8 mill rate increase, which boosts property taxes by 20 per cent.
Speaking after the meeting, Mayor Roy Ludwig said raising taxes is not something council takes lightly. However with a $38 million debt looming and some much-needed infrastructure work scheduled for 2014, he feels council had no other choice.
"Unfortunately we went for too many years without raising the mill rate and now we are paying the price," Ludwig said following the April 26 meeting. "We are hoping after this second increase, which is a fairly large increase again this year, that we can go back to more reasonable increases in the future."
Combined with a two-mill jump in 2013, Estevan taxpayers have been hit with an increase of over 40 per cent in just two years.
"It's never an easy decision to raise taxes by a hefty amount like we have done here a couple years in a row," Ludwig said. "But we have made the commitment that we are going to take care of business and that is exactly what we are going to do."
In a report from city manager Amber Smale, it was noted that municipal taxes for the average home, based on an assessed value of $280,000, will increase by $164 from 2013. She added that Estevan still has some of the lowest property taxes in Saskatchewan despite the increase.
Overall, the City is expecting revenues of $31.11 million in 2014. That total includes the additional $2.2 million that the mill rate increase is expected to generate. Total expenses are forecasted to be $29.77 million, which would be a decrease of 18.27 per cent when compared to expenses in 2013. A big reason behind the decrease is a capital project funding decrease of $8.1 million.
Smale's report also provided further insight into the City's financial picture and the pressures it faces.
She said unless there is a fundamental change in the revenue framework for cities with a population below 100,000 Estevan will continue to face fiscal pressures. Smale added that becoming more proactive in program delivery and finding process improvements will also be critical for the City.
"Without ongoing revenues that are more directly linked to growth and in recognition of the impacts of the oil and gas industry in Estevan, coupled with a broader range of revenue sources, the fiscal pressure will continue," Smale said.
The report added that in the future the City should be able to suffice with more moderate tax increases in order to give them an opportunity "to rebuild its financial capacity and address both the growing infrastructure and service level expectations of our residents and visitors in Estevan."
Smale said the City will also need to conduct a thorough review of current fees and charges to ensure they are reflective of the costs of delivering, maintaining and operating the various services.
"While the additional funding received from the federal and provincial governments is more predictable, it is still at a rate that is not reflective of the current situation in Estevan and the impact the oil and gas industry has on Estevan's infrastructure and economy," she said.
"According to the 2012 Community Profile released by the Estevan Chamber of Commerce, Estevan sees 98,000 visits per day. This means the City is trying to respond to the demands of a City approximately five times its size and the City must consider whether it is providing sufficient funding for capital requirements. It is essential that City Council include the increased capital funding in the 2014 and future budgets if progress is to be made in addressing the existing and growing infrastructure requirements of the City."
