An update on the city’s financials does not paint a promising picture. Members of the economic and finance committee are hearing an update spread over three meetings as part of the annual budget review process.
City Manager Lloyd Brierley says factors outside the city’s control, combined with previous decisions on taxes contribute to the challenges the city faces.
“This report paints a vivid picture of our current economic conditions, spotlighting the strain on the city’s financial position. Stubbornly high inflation impacts citizens’ daily lives, with increased costs for shelter, fuel and food. Compounded by three years of zero per cent tax increases, maintaining service levels become a formidable task for the 2023-2026 operating budget period,” Brierley says.
He adds increases in the budget also add to the strain, including a significant increase in Lethbridge Police Service funding.
“Beyond law enforcement, in the 2023-26 operating budget, council bolstered resources for homelessness outreach, mental health initiatives and crime prevention and further introduced a matching grant program for businesses and property owners for enhancing security measures,” he says.
Chief Financial Officer Darrell Mathews says escalating debt servicing costs could lead to increased utility rates or delaying new capital improvement projects. The city needs improvements to its water and wastewater infrastructure, something council is hoping to do without significant rate increases
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Mathews says inflation and interest rates are contributing to a slow in land development, which impacts city revenue. Though the city is seeing development in the commercial sector, housing starts are down.
“If unaffordable market conditions of high inflation and interest rates persist, there is a risk of continued stagnation in development – this would not only impact corporate revenues, but also exacerbate the housing shortage, worsen the affordability crisis due to the increasing gap between demand and new supply for Lethbridge citizens,” Mathews says. “In my 27 years within financial services, the current economic pressures and changes are unparalleled in my experience. The current economic realities demand a reevaluation of many financial models that have been relied upon in the past.”
Brierley says the update is meant to give the committee the information it needs to make informed decisions and his team will present members with options and tools to deal with the challenges.