Council Doubles Down on Tax and Spend Strategy, Adds Stealth Tax Hike to Revenue Mix

Town of Drayton Valley Council approved its 2025 Interim Budget on December 11, 2024.

Summary:

• Operating Budget includes 10% increase in wage costs & 9% increase in overall spending despite return to 2-3% inflation for 2024 & 2025

• Budget delivers third year of significant tax increases, cumulatively 18% since 2022

• Budget relies on stealth tax increase to hide big spending.

• Tax Increase + Stealth Tax = 7% Total Increase

9% Spending Increase vs. 2% Inflation

Excluding non-cash expenses (Amortization, ARO & Accretion), Council approved a $2.2 million increase in operating spending from 2024’s budget, being an 8.57% increase.

The final operating budget by expense type shows a $1.16 million increase in wage costs, or 9.63%. Disclosed elsewhere is $90,000 for COLA wage increases for non-union staff which brings the total wage cost increase to $1.25 million or 10.4% (2).

The spending growth would have been worse but for an approximate $150,000 savings on insurance premiums. General Manager of Corporate Services, Elvera Thomsen, said at the November 28, 2024 budget meeting that Contracted and General Services would have increased 8% instead of the 5.2% the preliminary budget showed at the time. Notably it was actually a 5.5% increase (final budget 5.9% increase), the wrong denominator was used for calculating the expense increase %’s throughout the November 28 budget presentation. Implied insurance savings: $5,402,460 x 8% - $281,669 = $150,528.

Residents might wonder if a 9% spending increase will result in enhanced services from the Town. Unfortunately, we will not see any benefit from the higher costs. The Town is still trying to justify large spending increases due to inflation, “inflation” was mentioned 10 times during the November 28, 2024 Budget Deliberations meeting even as price pressures have declined to normal levels.

Bank of Canada’s October 2024 forecast for 2024’s final inflation is 2.5% and 2025 inflation of 2.2% with further declines possible (1). The Town’s 9% spending growth is 4X the rate of inflation.

Taxes Up, Up, and Away

The approved budget increases net taxation an estimated 3.8% from $12,860,997 in 2024 to $13,354,049 in 2025. Total taxation is higher at $17,099,241 with the difference going to School and Seniors requisitions.

This 3.8% increase is on top of a 7.8% increase for 2024 and an 8.4% increase for 2023. Net taxation has increased $2.3 million since 2022’s $11,009,319 budget, that’s 18.2%.

Here’s the Town’s historical net taxation by calendar year:

Clearly the current council has capitulated to Administration’s big spending plans, despite no recognizable improvement in services to the community.

Stealth Tax Increase

With an 18% increase in taxes over the last few years, Council must be getting pressure from the community to mitigate our ever-increasing tax burden. Rather than put in the effort to streamline and rationalize operations and make them more efficient, they followed Justin Trudeau’s lead and chose a stealth tax increase to misdirect residents.

If you’ve had a look at your energy bills lately you’ve likely noticed that the cost of all the extra fees and Carbon Tax cost more than the actual energy consumed. One of those line items will be increasing 29% in 2025. In order to fund its big spending budget, Council chose to sneak in another $400,000 increase in revenue directly from residents (equivalent to a 3.2% tax increase) with their Franchise Fee increase. See Appendix A for the Town's Operating Budget Overview.

The Town’s 2025 budget also hides additional tax increases, to be explored in future.

Final Spending Increase Likely Higher

Town Council’s 9% spending increase is based on the increase from the 2024 Budget. Yet the Q3 Budget update showed a $900,000 surplus year-to-date with a stated expectation that there will be some budget surpluses after Q4. Thus, the increase in spending will be higher than 9% compared to actuals for 2024.

During the November 27, 2024, Regular Council meeting, council received a budget update for Q3 (Jan-Sep, 2024) (5). Year-to-date surpluses partly due to wage savings were lauded. Interim CAO Pat Vincent even noted that despite these vacancies “There’s no suffering in the levels of services as a result of those particular costs savings.” Residents are left to wonder why such vacancies can’t remain to reduce the community’s tax and stealth tax burden.

Conclusion

In conclusion, if residents disagree with the Town of Drayton Valley's big taxing and big spending approach to municipal governance, please reach out to Council before the final budget is approved in May 2025. Please also consider running in the 2025 election to provide your talents to the Town, or encourage others you know would be good to run.

Sources

(1) Bank of Canada, Projections

https://www.bankofcanada.ca/publications/mpr/mpr-2024-10-23/projections/

(2) Town of Drayton Valley 2025 Municipal Budget

https://www.draytonvalley.ca/wp-content/uploads/2024/05/Master-Budget-Package.pdf

(3) Town of Drayton Valley, December 3, 2024 Budget Meeting Agenda

https://draytonvalley.civicweb.net/document/30376/

(4) Town of Drayton Valley, December 11, 2024 Regular Agenda package with final budget docs

https://draytonvalley.civicweb.net/document/30713/

(5) Town of Drayton Valley, November 27, 2024 Regular Agenda package with Q3 update

https://draytonvalley.civicweb.net/document/29271/

Appendix A – Operating Budget

Source: Final Operating Budget by Expense Type approved by Town Council (2)