TAMRMS#: B06
10.2
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Amendment to Council Policy C-FS-05 Budget & Taxation Guiding Principles - changes to threshold
Notice given by: Councillor Biermanski
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PROPOSED MOTION(S):
recommendation
That Council Policy C-FS-05, Budget & Taxation Guiding Principles, section 14(b)(v) is amended to change the threshold to be eligible to apply the prior year's assessment growth from 5% tax increase to 3.5% tax increase.
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ADMINISTRATION’S UNDERSTANDING OF THE INTENT OF THE MOTION
Administration understands that if this motion is approved C-FS-05 Budget and Taxation Guiding Principles, section 14, b, v. would be updated as follows
“Application of prior years assessment growth revenue may be considered if the proposed annual tax rate increase is in excess of 3.5 per cent. The funds approved by Council for withdrawal from the prior years unallocated assessment growth shall be only the amount required to limit the tax rate increase to 3.5 per cent subject to iv.”
ADMINISTRATION’S RECOMMENDATION
In July, 2025, Administration brought forward a recommendation to increase the threshold to 6.5 per cent with Council approving an increase to 5 per cent. As the economic environment has not changed since that time Administration does not recommend a reduction.
PURPOSE OF REPORT
The purpose of this report is to present a motion for which Councillor Biermanski gave notice on March 3, 2026.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
On July 15, 2025 Council passed the following motions:
CB-25-039
That Policy C-FS-05 be amended by deleting both instances of the number “3.5” and replacing them with “5.0” in section 14(b)(v).
That the following Council policies be approved:
C-FS-05 Budget and Taxation Guiding Principles, as amended; and
C-FS-01 Financial Reserves.
On April 23, 2018 Council passed the following motion:
POL-18-007
That City Council Policy C-FS-05 Budget and Taxation Guiding Principles section 14b. be amended by adding the following:
• iv. An annual budgeted transfer to the Growth Stabilization Reserve will be included as part of the base budget to recognize the prior years assessment growth transfer to a maximum of $2.5 million.
• v. Application of prior years assessment growth revenue may be considered if the proposed annual tax rate increase is in excess of 3.5%. The funds approved by Council for withdrawal from the prior years unallocated assessment growth shall be only the amount required to limit the tax rate increase to 3.5%.
• vi. Assessment Growth revenue collected in a given year and not applied against the tax base as per v. above shall be made available for use for one-time operating or capital expenditures at Council’s direction.
BACKGROUND AND DISCUSSION
At the July 2025 Standing Committee of the Whole meeting, Administration presented recommended amendments to Council Policy C-FS-05, Budget and Taxation Guiding Principles. One of the proposed amendments was to increase the threshold from which a prior year’s assessment growth can be applied to the base. Administration recommended increasing the threshold from 3.5 per cent to 6.5 per cent; however, Council ultimately approved a 5 per cent threshold.
As noted in CM-26-011, while assessment growth brings in new tax revenue to the municipality, it also creates additional cost pressures associated with servicing a growing community. These costs include, but are not limited to, the ongoing maintenance of additional roads and sidewalks, programming and services to a larger population base as well as the construction and operation of new facilities.
As illustrated in the chart below, in an ideal scenario, new revenues would be realized at the same time as the need to provide the increased services. The chart below depicts a simplified, linear growth model that assumes stable and predictable patterns and associated costs. Under this scenario assessment growth revenues and growth-related service requirements would align in a consistent and balanced manner.
However, the reality is that the costs will often occur after assessment growth is realized. For example, in the early stages of development, the maintenance of new roads and sidewalks can often be absorbed within existing staff, budget and equipment. As development continues and additional neighbourhoods come online, however, there is an increasing need to expand both staffing and infrastructure to maintain service levels with other areas of St. Albert. This non-linear relation between assessment growth and municipal operating costs presents an ongoing challenge in achieving stable and predictable tax increases over the long term.
The original intent behind the management of the new assessment growth revenue was to establish a strategy that better aligns revenue availability with the timing of municipal operating expenses. Under this approach, in years where assessment growth revenue is higher than the required municipal budget investments, we would “save” the money as shown on the graph below in peach. In years where municipal operating costs were higher than the assessment revenue, we would “use” the money as shown on the graph in purple.
The concept of the reserve is that the City will collect the new revenue from the increased assessment base each year. If we choose to “save“ this revenue, what this really means is that in the current year we will not commit the revenue to any ongoing items.
The chart below provides an example of this concept. In this example, by the year 2030 the City would be levying an additional $2.5 million in additional assessment revenue that has not been committed to ongoing costs. If in the following year a new facility becomes operational and requires additional staffing and program expenditures, these costs could be added to the operating budget and offset using the prior- assessment growth which has not been permanently allocated.
Incorporating a threshold into policy allows for any unused assessment growth to accumulate over time. This approach provides the City with the capacity to mitigate the operating impacts associated with new infrastructure coming by applying unused assessment growth, thereby helping to stabilize tax increases.
When the original 3.5 per cent threshold was established in 2018, the average annual tax increase was 1.8 per cent. The threshold was intentionally set at a level that would allow assessment growth transfers to accumulate over time. This approach was intended to provide the City with the capacity to offset future operating costs associated with new infrastructure, such as a fire hall or new amenities building.
Since that time, inflationary pressures, combined with Council’s approval of a 1.5 per cent annual tax increase to support the repair, maintenance, and replacement of existing capital assets have resulted in an average tax increase of 3.9 per cent between 2022 and 2026. Given this sustained increase, raising the threshold is necessary to provide a guardrail towards the City’s ability to mitigate tax impacts when new infrastructure becomes operational or where there is a significant increase in operating expenditures related to current services is required to maintain Council approved service levels.
If the threshold is set at or below the average annual tax increase, the potential for more frequent use of the policy would limit the City’s ability to accumulate funds within the Growth Stabilization Reserve, thereby diminishing its intended purpose - providing tax stabilization in years when significant growth-related operating costs are introduced.
The ultimate threshold identified in the policy is a statement by Council of what constitutes a “high” property tax increase and in those circumstances whether consideration should be given to utilizing this “saved” money to offset the increase.
Since the policy was approved, the prior year’s assessment growth has been used to offset the base in 2016, 2018, 2022, 2023, 2024 and 2025. In 2021 the portion of assessment growth not applied to business cases was applied to the base instead of transferred to the Growth Stabilization Reserve and in 2022 all of the assessment growth was applied against the base. The chart below indicates the amount of assessment growth applied against the base and the impact on the tax increase.
If this motion is approved along with the motion in CM-26-011 to change the annual allocation of Assessment growth more funds tagged to be used to fund future growth could instead be directed to offset annual tax increases.
IMPACTS OF MOTION
Financial:
None at this time. Should the threshold be established at a level that permits the ongoing application of prior-year assessment growth to offset current tax increases, there may be limited or no mitigating options in years when new growth or infrastructure requirements result in higher budget increases.
Compliance & Legal:
None at this time.
Program or Service:
None at this time.
Organizational:
None at this time.
Risks
None at this time.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Not applicable.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
N/A
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Report Date: April 7, 2026
Author: Suzanne Findlay
Department: Financial & Strategic Services
Department Director: Anne Victoor
Managing Director: Diane McMordie
Chief Administrative Officer: William Fletcher