Lethbridge residents could see increased taxes, levies and fees in the future if the economic environment does not improve. That’s according to the city’s Chief Financial Officer Darrell Mathews.
Tuesday kicked off the city’s three-day annual economic review process where the Economic and Finance Standing Policy Committee delved into its financial landscape.
According to Mathews, 2022 data shows that Lethbridge has some of the lowest financial reserves per capita in the province. Reserves are resources that are held back from the budget and held for some other purpose. They help local governments manage risks for unplanned and unavoidable expenses and help the community be prepared for emergencies.
During his presentation, Mathews pointed out some of the reasons for the impacts the city has seen on its reserves, including the pandemic, inflation and rising interest rates. He says land development in Lethbridge, for instance, could be significantly impacted in the future due to these escalating economic challenges tied to inflation and interest rates in particular.
Mathews says Lethbridge has seen a scaling back of sub-division building activities. A trend expected to continue into next year. And he says the slowdown will impact city revenue in the coming years through a decrease in building permits, property taxes, and levies. He says this could affect future capital projects and that council should be mindful of this when approaching the city for future “asks” during the 2027 – 2030 operating budget.
In addition, he says, the city’s airport reserve will continue to see pressures due to the pull out of Air Canada and the ongoing negative impacts of the pandemic. In 2022 the airport reserve was increased by $3 million, but it’s seen a continual decline. The airport reserve needs adequate funding for airport operations, says Mathews, pointing out that “ultimately the airport needs increased routes or other revenues to reduce the pressure on the reserve. If this does not occur by 2026, council will need to look at putting further ongoing taxation support in the 2027-30 operating budget cycle.”
The Economic Finance Standing Policy Committee will continue to meet through November 16 and will continue to cover topics such as economic conditions, taxation pressures, utility pressures, operating and capital pressures, and the impact on reserves.