City facing gloomy financial outlook
By Lethbridge Herald on November 14, 2023.
Chief Financial Officer Darrel Mathews discusses the impact inflation is having on the City’s financial situation Tuesday morning at a meeting of the Economic and Financial Standing Policy Committee of Lethbridge city council.
Herald photo by Al BeeberAl Beeber – LETHBRIDGE HERALD – abeeber@lethbridgeherald.com
Chief Financial Officer Darrel Mathews painted a gloomy picture of the Lethbridge’s financial situation Tuesday morning in the first of three days of Economic and Finance Standing Policy Committee meetings.
The committee, consisting of all members of council, will also meet today and Thursday at 9 a.m. in council chambers at City Hall.
On the committee’s agenda are presentations from numerous parties on numerous subjects. Among the topics of interest to the public will be a presentation by Director of Infrastructure on bylaw 6428 – increase of parking fines/traffic bylaw amendment.
Mathews this week is also scheduled to talk to the SPC on the community group budget process review for grants and fee for service.
On Tuesday, the CFO gave council a detailed look at the impact inflation and rising costs are having on the City in multiple ways.
“In summary, escalating economic challenges are tied to inflation and interest rates are poised significantly affect land development in the community,” Mathews said.
“Local developers are scaling back subdivisions and building activities, a trend expected to continue into 2024. The slowdown driven by inflation pressures and customer concern” will impact city revenues from 2023-26, Mathews said. That includes off-site levy revenues, fewer building permits and a decline in property tax growth. As a major land developer in Lethbridge, the City faces the same pressures as local developers with slower subdivision lot sales” which affects the use of Lethbridge lands as a funding source for community projects.
“The remaining 2023-26 budget period may see additional economic impacts,” the treasurer added.
City manager Lloyd Brierley opened the meeting by telling the SPC “this report paints a vivid picture of our current economic conditions, spotlighting the strain on the City’s financial position.”
Inflation affects many aspects of City operations and it is compounded by three years of zero per cent tax increases, he said.
“Rising expectations of public safety necessitated additional funding for the Lethbridge Police Service with 22 new officers,” her added.
“In the 2023-26 operating budget, council also bolstered resources for homelessness outreach, mental health initiatives and crime prevention and further introduced a matching grant program for businesses and property owners for enhancing security,” he said.
Funding for outdoor spaces, parks, culture, environment and sports organizations also received support, he said.
“The economic climate further intensified as the Bank of Canada implemented new rules for rate hikes between January of 2022 and July 2023, impacting residents, businesses and the City’s borrowing costs,” said Brierley.
Mathews presentation, he said, was to show the tangible effects on the community and the City organization of rising interest rates, he said.
“In the upcoming three days, the Economic and Finance committee will grapple with emerging financial challenges” impacting things such as affordable housing, river valley accessibility, culture and transportation, escalating parking fines, utility rates and support for the vulnerable, he said.
The SPC’s recommendations will be adopted for city council for potential approval for an upcoming meeting, he said.
The presentation opened with a slide that showed in January of 2020, the overnight bank rate was 1.50 per cent. By July of this year it had risen to 5.0 per cent. By December, it’s expected to reach 5.25 per cent before gradually declining to 3.50 per cent in December of 2024.
The prime lending rate in January 2020 was 3.95 per cent and by July 2023, it had climbed to 7.20 per cent.
Taxation pressures on the City include public safety, parks, community building as well as homelessness and crime prevention, the SPC heard.
There are also pressures on utilities with water and wastewater system with both experiencing a sharp increase in demand in recent years due to industrial growth and the impact of hotter and drier summers.
Mathews said there is a need to amend the Water and Wastewater Capital Improvement program to advance projects “to significantly increase the utilities’ capacity to address anticipated demands.”
The first phase of the water utility project will be $123 million with borrowing of up to $92,442,000 required while the first phase of a wastewater capacity project will be $88 million, with borrowing of up to $71,403,000 required.
The SPC was told major land developers aren’t planning new subdivisions this year which has the potential to reduce offsite levies revenues to fund existing loan payments. A reduction in Opportunity Lethbridge lot sales will impact land banking and subdivision surplus projects and there could be a reduction in development and building permits as a result as well as a reduction in property tax growth.
Permits for single-detached dwelling units in 2023 were 35 per cent lower than anticipated while permits for semi-detached units are 23 per cent lower than projected.
There are 644 vacant lots in the city which is four years supply at current rates. The outlook for next year is expected to be similar to 2023.
The SPC heard that the current annual debt payment is $5,066,148.78.
The City is currently monitoring several reserves including the airport’s which will continue to face pressures due to the ongoing impact of the COVID-19 pandemic and withdrawal of Air Canada services. Last year, the reserved was increased by $3 million to help stabilize it. Mathews told the SPC that ultimately the airport needs more routes or other revenue to reduce pressure on the reserve.
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So let’s start by reducing costs to the taxpayer, rather than softening us up for a future jump in taxes. Eliminate a bunch of redundant, overpaid, do-nothing fat cat jobs, along with their abundant associated support staff in City Hall. You all know who I’m talking about here. Too many jobs with dreamed-up titles, taking up desk space there.
Quit with the ever-increasing expenditures on bicycle lanes, already! That person in City Hall who has his own bike-related agenda is one of those fat cats.
Quit with throwing millions at the addicts… they don’t want our help. That should be the Provinces jurisdiction, shouldn’t it? Also, other cities are getting huge financial help from the Feds, why aren’t we?
The present City admin is only going to continue on this path of increasing our taxes. This has to be their last kick at the cat here, next election would be nice to see some new, common-sense members!
Less money spent on bike lanes, picket ball parks and other fluff would be a wise decision. Snow removal on the side streets in this city is non existent and is far more important for safety of citizens. There needs to be a full examination on how decisions are made and who is making them.
Small cuts add up.
For example, it is shameful that empty City of Lethbridge trucks idling when it is still warm outside, Wasted gas, and pollution.
Here we go. The ‘I value this, but not that’ harangue by our unelected champions of ‘common sense’.
So, how about those 22 more police officers plus accoutrements? Though, I suppose, the extra $million a year helps our terrified elders sleep at night.
You sarcastic twit. It may very well help the 82 year old widow who just had her house kicked and a guy walking around her bedroom at 2 am. Stolen: a box of ashes. You have exposed yourself thru your dripping sarcasm just what a condescending person you are. Yeh, she may sleep better at night.
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This just begs to be commented on. First, quit the pandering to all of the non-profit organizations that have been whining for more for the last how many years. the most blatant being the Japanese garden. Let them at least try to earn some of their funding by putting a little effort. (ask your alderperson about the cost of installing the lights in the garden and who pays for it).
take a good look at the levels of managers across the whole organization, multiple levels. One of the most over managed being Culture and Rec.
All of them striving to cut their budgets by order of higher ups. They put a lot of effort in to it so they can get that pat on the head and secure their jobs for another budget cycle.
Maybe examine the hiring practices in all departments. Seems it has become an organization of family entitlement. Sons, daughters, wives, husbands and good friends seem to be getting jobs over much more qualified applicants.
This city is in shambles as far as good management goes. Time to fire the whole works and start from scratch.
Absolutely right. Just look at a comprehensive list of City of Lethbridge positions, it is mind boggling – eg junior information systems tech at $59.55 per hour, etc, etc. What do all these overpaid people do all day, other than endeavor to justify their jobs. Time for a witch hunt thru City Hall!