Although discussions for the 2020 budget are still in the preliminary stages, city administration is tentatively suggesting a tax increase of three to 3.25 per cent to offset expected revenue shortfalls.
There are several reasons the City of Moose Jaw will experience lower revenue next year, Brian Acker, director of finance, explained to city council during its Sept. 9 executive committee meeting.
Provincially, the economic forecast indicates there will be a modest real domestic product growth of 1.2 per cent; a modest increase in employment levels of 0.7 per cent; and some improvement in the housing market for 2020.
Locally, building permit activity is up compared to the same period last year. There have been major land development deals with Carpere Canada and SaskPower, while job creation activities — such as a pilot project for immigrant workers — are commencing.
However, there are other financial factors facing the municipality that pose a challenge, Acker said. The biggest challenge facing the operating budget is a low assessment growth — less than one per cent — that results in minimal municipal taxation growth each year, also less than one per cent.
Early municipal taxation estimates suggest there will be growth of less than one per cent. Each percentage point of municipal taxation in 2020 is expected to generate $293,000. Assessment growth in the range of two to three per cent would provide a big boost to annual revenue growth.
The biggest pressure on the operating budget in expenses is salaries and benefits, continued Acker. This area accounts for about 58 per cent of expenses. This amounted to $28.6 million in expenses this year.
Next year, new revenues are expected to be $400,000 while expenses are estimated to be $1.159 million. This leaves a shortfall of $759,000.
It is anticipated that an increase in municipal taxation of 2.60 per cent would be required to balance the operating budget for next year.
“Once one considers some modest enhancements, a municipal tax increase (in 2020) in the three- to 3.25-per-cent range is projected at this point, but will be refined as the budget is developed,” Acker added.
In 2020, the general capital reserve is expected to face a deficit of $7.5 million; the water utility reserve a surplus of $29,018; the sanitary sewer utility reserve a surplus of $6 million; the solid waste utility reserve a surplus of $3.9 million; and the land development reserve a deficit of $4.5 million.
Budgets brought to council must be balanced while meeting the goals of the strategic plan and the needs of the community, said Acker.
A goal in the development of budgets is for long-term fiscal sustainability of programs and services contained in the budget. To do that, there would need to be an increase in taxation and non-taxation revenues; a reduction of expenses; an adjustment in programs and services to be more efficient; and a more strategic use of debt and reserves.
Council later voted 6-1 on a recommendation to receive and file Acker’s report. Coun. Brian Swanson was opposed.
The next executive committee meeting is Sept. 23.
