City should be ‘debt astute’ rather than ‘debt averse,’ councillor says: Proposed changes to City of St. Albert’s debt management policy

City of St. Albert administration is making significant changes to its debt management policy in an effort to avoid drastic swings in property tax rates for residents. The proposed changes come after a special committee meeting held more than a year ago to discuss the city’s use of debt to fund projects.

Coun. Mike Killick believes that the shift towards being ‘debt astute’ rather than ‘debt averse’ is the right direction for the city. He emphasized the importance of timing and planning ahead when it comes to managing debt.

One of the major proposed changes is the introduction of a new limit on annual debt payments, which would not exceed 18 percent of the city’s consolidated operating expense budget. This limit aims to ensure that the city does not allocate too much of its budget to fixed debt payments, allowing for financial resilience and the ability to respond to external factors and emergencies.

Another key change is the decision to continue budgeting for debt payments even after a tax-supported debenture is paid off, rather than reducing property taxes accordingly. This change is intended to mitigate tax swings and ensure a stable tax base for the city.

City’s chief financial officer, Diane McMordie, explained that these policy changes also support the concept of ‘debt laddering,’ where new debt is taken on shortly after older debt is paid off to limit the impact on property taxes.

Council members, including Coun. Sheena Hughes and Coun. Natalie Joly, expressed support for the policy changes, highlighting the importance of considering the impact of long-term debt on property taxes and reducing risks associated with taking on additional debt.

While the changes were unanimously approved by the committee of the whole, McMordie noted that the city may still face challenges in funding major infrastructure and recreation projects planned for the future. The policy changes will need to be approved again in an upcoming council meeting.