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generous development initiative that pays 40 per cent of offsite levies on new development.


Though cost containment is a major portion, eventually higher taxes will replace most of the shortfall.


That hits not only at the pocketbook of taxpayers, but also at their civic pride.


Up to 2014, the city’s energy interests were required to pay a $24.5 million dividend to support the municipal budget, plus a portion of base revenue to a building reserve.


Like clockwork it paid out to not only cut the tax burden by about $1,000 per household, but also pay for major building projects. The Esplanade Arts and Heritage Centre, the 6,100-seat Family Leisure Centre, $74-million Canalta hockey rink and major berming projects were built with no or minimal debt since 2000.


However, as revenue fell since the commodity crash in 2008, paying out the standard dividend was draining cash from the business.


The utility also suffered more than $100 million in write downs as the value of gas inventories fell.


Three years ago, the dividend formula was changed to a distributable cash model, then $48 million transferred from a gas purchasing reserve to safeguard the tax stabilization payment.


It was meant to be replenished by new profits that never materialized.


Now, new dividends will be directed into a endowment for capital building, while more energy division cash will be used to stagger in tax increases.


goal in the first two years of a 10-year plan.


We have a 10-year


In 2018, the savings combined with new revenue will total $6.8 million — equal to a 10 per cent tax increase, though taxes will only be 4 per cent higher as far as energy replacement is concerned.


Coun. Robert Dumanowski, the chair of both the development and finance committee, had said repeatedly in the fall of 2016 that citizens approached him with their feeling that the city would backtrack on cuts.


plan, which I think is very prudent.


General inflation and some increases could mean a total tax hike of 7 per cent. Though if savings hold, budget authors have gotten one third of the way to their


“I’ve had conversations with people who said that they want to walk through city hall and see every second desk empty,” he told the News in November.


“That’s just not possible for any organization, let alone a huge organization like the city that has to provide service.”


“But I think people will be surprised at what comes out of the review. We’re talking about items that will get us there easily.”


That included some notable, but difficult decisions that required some political


capital from citizens.


In early December council approved the closure of the 46-year-old Medicine Hat Arena and Heald outdoor pool — avoiding costly scheduled maintenance as well as $770,000 per year in combined operating costs. As well they agreed to review of transit operations (one of the most heavily subsidized city services) in hopes to cut $1 million out of the operations budget by 2019.


There are some moving parts here: New energy dividends are salted to be deposited in a new endowment fund with extraordinary invested income use for capital projects. However, half of the investment income could be used to bolster the bridge funding as taxes are ratcheted up.


For Clugston, who long promoted a savings endowment, says Medicine Hat is lucky to have the option to spend reserve cash. He also say’s Medicine Hat is making decisions governments topically avoid, but the end result is a better financial future.


“If other levels of government were doing this, you’d see billion dollar reductions, but we’re not seeing that,” he said. “They’re running deficits. We have a 10- year plan, which I think it very prudent.” ❚


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Leaders Needed


#41241060 • 03/28/2017


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