Managing rising fuel costs in Woodlands County’s operations

Woodlands County Council voted on adding adjustments to the 2022 budget following an explanation of why during last week’s council meeting. Alicia Bourbeau, Director of Corporate Services, explained that the adjustments were for a few different things. Woodlands County Council had previously approved the budget for 2022 on December 22, 2021. Council had approved the budget at $32,939,370, and following the adjustments, the total dropped slightly to $32,112,806.

“It was discovered that a capital project in the amount of $642,500 was entered both on the revenue and expenditure side, so the effect of removing that is net-zero at this time,” she explained. “We have an increase in the debenture costs. While debenture costs remain static over the lifetime of the debenture, there was a debenture that expired last year and a miscalculation on what the new amount was prior to receiving the confirmation from the Alberta Capital Finance Authority.” The debenture increase was $108,691.

The next increase listed was from the tax incentive bylaw, which was carried over for 2022. It allows Woodlands County ratepayers to receive a discount on their taxes by paying by a specific date. The cost for the county to do so is $56,538. “We also are noting an increase to the crack sealing contract, and that is largely contributed to the fuel surcharge that we are seeing on a number of our invoices now,” explained Bourbeau. Rising fuel costs impacted the budget a second time. “We’ve added $400,000 to the 2022 operating budget in anticipation of fuel costs being higher. We had them in the budget at just over $500,000, and now this will put it at just over $900,000 for the year.”

The final piece was a decrease in the requisitions for schools and seniors, reducing the budget by $271,953. A transfer from reserves for $501,390 to cover the adjustments brought Bourbeau to the new budget amount of $32,112,806. Councillor Alan Deane asked about the fuel. “It was budgeted at $500,000, and the number you guys are forecasting is now $900,000?” Bourbeau replied, correct. “So, just about double. Wow. That’s huge,” responded Deane.

To get to this year’s tax number needed to cover operations, Bourbeau explained how the budget broke down. She said that $230,048 would come from the sale of goods and services and that 1.2 million would come from their sources, such as utilizing their own equipment. She added that they expected 3.4 million in grants, leaving $27,255,579 to come through municipal taxation.

Councillor Deane asked if the increases to the incentive bylaw and the debenture costs were captured within the three percent tax increase forecasted for county ratepayers or if those were on top of the three percent. “That is captured within,” explained Bourbeau. “We have now adjusted what we anticipate putting into reserves rather than add another burden to the ratepayer.”

Councillor Dave Kusch asked how the budget and taxation proposed would be affected by the ongoing inter-municipal collaboration framework (ICF). “In the originally drafted 2022 budget, we have under our category line of Intermunicipal, a 2.8 million dollar expense. Our breakdown sheets show that 1.4 million would be for directly related ICF payments to other municipalities. Any (funds) that weren’t needed out of that $1.4 would be shifted over to pay for any arbitration costs. The other $1.4, if it weren’t necessary for the ICF, would go to legal costs on the proceedings and the costs to have the agreements drafted up. Any additional or unutilized funds at that point (could go) directly into the county reserves.”

Councillor Kusch then asked what would happen if the ICF payments were higher than the $2.8 million set aside. “If it were to exceed the 2.8 million, then we would be looking at directly utilizing funds that had been set aside to be put into reserves for 2022. There are monies allocated towards that. I believe it’s 2.8 million dollars. If our expenses come out as more than 2.8 million, we would be looking at directly taking from those funds, and that, of course, would be coming to council, so you are aware that is happening.”

Bourbeau further explained that there is more money available too. “The three million dollars we have set aside as an allowance for bad debt. Again, it’s a little unknown what’s happening in oil and gas. We have had some very good increased relationships with a lot of our industry players. We are not experiencing a great deal of adversity in collecting the taxation, other than a couple of known companies that had a lot of legal issues that they were going through. That would also potentially be another opportunity.”

Reeve Burrows asked how much would be going into the reserves for 2022, with the chunk being used to cover increased costs. “Right now, we currently have $2,139,237.48 as our adjusted (amount), as our anticipated allocation to reserves.” Councillor Jeremy Wilhelm asked if it would be better to increase taxation slightly to make up the shortfall as opposed to cutting their input into the capital reserves. Reeve Burrows said that would be a decision of council.

Bourbeau said that council’s five-year plan, which would see Woodlands County ratepayers get a fifteen percent tax increase over five years, roughly three percent each year, was considered “pretty aggressive” already. “We also had, with a number of our residential properties, they were at a zero percent tax rate for the three-acre parcel of their property. In 2016, legislation changed on that where municipalities were no longer allowed to have a zero percent tax. Now all of our residential ratepayers that had seen that portion of their property taxes at zero percent were also going to be feeling that increase. While we have maintained that three percent increase to the tax rate, many of the ratepayers have felt a significantly higher increase because of that change in legislation.” The three percent increase for ratepayers amounts to being just shy of 1.1 million dollars extra for Woodlands County.