A Town of Sundre councillor recently questioned whether two-year budgets are the way to go.
“Is the two-year budget mandatory?” inquired Coun. Myron Thompson during the June 20 meeting.
Although just about all of council collectively answered no, that will most likely change following the finished provincial review of the Municipal Government Act, he was told.
The discussion arose during an administrative report when Coun. Cheri Funke asked for an update on the budget process.
“We're looking at presenting a budget to council in the fall, which will be for 2017 and 2018,” replied Vic Pirie, director of finance and administration.
About a dozen people had come out for a public discussion on the budget the week before council's meeting, and “for the people who attended, we did receive some comments that will be valuable going forward in assisting in the development of the budget,” he said.
Going forward, the town's administrative staff has been busy working diligently on each department's budgets, he said.
“We'll be spending the months of July and August putting them together and coming up with an overview of what we're looking at in the way of 2017 and 2018,” he said, adding the process of working with council should be underway by September or October at the latest.
Funke said she fully expected administration “to come in with a 15 per cent or so increase of what we need. That's our job, to go through it (the budget) and make the cuts. I want to make sure that administration comes to us with everything that needs to be done. We know it's going to be bad, but let us be the bad guys.”
Pirie said he appreciated the councillor's comment, and that as administration develops the budget, staff will bring forward to council whatever adjustments or reductions are made.
“We will hopefully be able to provide council with the implications of those reductions so that as you are making whatever adjustments are determined, you'll understand the consequences of those reductions,” he said.
“As for the percentage level brought forward, we'll see what happens as we put the budget together.”
That's about when Thompson inquired whether council wants a one- or two-year budget and if a decision had already been made.
“My recollection is we did discuss it and decided that we would go with another two-year budget because we've already done a two-year budget,” said Mayor Terry Leslie.
A two-year budget provides council with the opportunity to practise a multi-year budget, the mayor said.
“And it would also carry through the next council election term so that the next council would have the first year kind of set so that they don't have to walk in and hit the ground running and develop a budget right away on a one-year cycle,” he said.
Additionally, once the Municipal Government Act has been reviewed and updated, it is expected to require municipalities in Alberta to have three-year budgets, he said.
“If we do another two-year budget before we're mandated to do three, we should be better prepared to do that.”
Besides, projecting a couple of years into the future for a two-year budget is already challenging as it is. Developing a three-year budget will be even harder, so council needs the practice, he said.
Thompson understood those points of views, but said he struggled with the notion of multi-year budgets during challenging economic times that can easily throw forecasts far off course.
“There's a significant difference between '16 and what's going to happen in '17 and '18. I think it should be one year at a time,” the councillor said.
“You can run into kind of a mess if your projections — when you set a budget for two years ahead of time — are out of whack.”
Those points are well taken, the mayor said.
“We've seen the economic uncertainty in the way that things have happened. But we know that the writing's on the wall — there's going to be a three-year requirement in the MGA review, so we need to practise,” he said.
Plus, built into the multi-year budgeting process is a spring adjustment period that provides the opportunity for council to make any changes as might be needed. It's also beneficial to get in the habit of considering projects that will be required years down the road instead of being focused only on the year ahead, he said.
Thompson also asked whether multi-year budgets are what municipalities want or simply what they're going to get.
“What did municipalities have to say about changes to the Municipal Government Act?” he asked.
The mayor said municipalities had a survey to fill out by the end of July to share concerns regarding the proposed changes to the act.
“That's the kind of thing I'm talking about,” said Thompson.
“When are municipalities going to be able to make decisions that benefit the municipality they represent — why do we have to be mandated by Edmonton?”
Leslie said no one on council was likely to argue that point, but pointed out there are some 340 municipalities in Alberta, including more than 60 counties. There are about 20 to 25 towns smaller than Sundre, as well as some villages, “that are under viability reviews because of the complexity that they have to face with not only budgets but also infrastructure deficits that they're facing and trying to make ends meet.”
Angie Lucas, acting administrator, said she understood how Thompson felt but added one-year budgets aren't going to be possible anymore. With a municipal election lined up for the fall of 2017 — about the time the MGA review is expected to be completed — the new council would have to come in and immediately start working potentially on a three-year budget if the current council prepared a one-year budget, she said.
“The last thing we want is a brand new council to have to walk in to do a three-year budget in two months.”
It has taken her and her staff several months to draft a 2017-18 budget, and work is still underway, she said.
“They take an awful lot of time to put together,” she said about budgets.
