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Wednesday , 21 October 2020

Cold Lake uses surplus money to balance budget and keep tax increase at zero

City council chose to offset the increase in the city’s 2020 Operational Budget with accumulated surplus from the previous year’s budget, bringing the average increase in municipal taxes paid to zero per cent this year.

The residential tax rate is set at 8.3149, the multi-family residential rate is 8.6439, and the non-residential rate is 12.5435.

These rates will generate about $20.6 million from properties within the city, which will then be topped up with just over $254,000 from accumulated surplus to balance the city’s $53.5 million operational budget for 2020.

This budget is inclusive of all municipal expenditures and transfers. In 2019, council used just over $555,000 in surplus to achieve an average zero per cent increase as well.

An accumulated surplus is the result of not spending money budgeted for the previous year–often in salaries not spent while positions are being filled, or better-than-expected revenue from investments, for example.

“Council is challenged with a difficult economy and an uncertain future because of the unprecedented situation due to COVID-19,” Mayor Craig Copeland said.

“Using accumulated surplus again means that we will need additional revenue, or we will have to look at reducing services in the city, to balance the next budget in 2021. With the uncertainty surrounding the economy and the COVID-19 situation, however, council felt the best target was a zero per cent increase.”

The tax rate is a factor used per $1,000 of property value to determine the amount of taxes a property is required to pay for municipal services.

Taxes are based on the assessment, which means that a tax rate increase or decrease does not necessarily mean an increase or decrease in the amount of municipal tax a property owner will pay compared to previous years.

On average, assessments in the City of Cold Lake dropped by about 3.4 per cent.

Owners whose assessments are in line with this average will pay the same amount of taxes as last year, while property owners who did not see as much of a drop will pay more.

Those whose assessment dropped by more than the average will pay less than the previous year.

“We still have work to do to finalize the distribution of municipal property taxes from ID 349, establish an Intermunicpal Collaboration Framework with the M.D. of Bonnyville, and receive fair payment from the federal government for its property within the city under its Payment in Lieu of Taxes program,” Copeland said.

“A lot is up in the air and council felt that it was best to hold our ground until we are on a more stable footing in terms of knowing what the future will have in store.”

Tax notices will be mailed by the end of the month with a June 30 due date.

The city’s capital and operational budgets are available online at www.coldlake.com.

Information on historical tax rates and the municipal property taxes collected is in the city’s annual report, also available online.

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