Understanding Financial Choices For Medicine Hat City Council

The conversation explores the themes of value perception in pricing and the importance of financial resilience and resource management. Our guest Drew Barnes, reflects on the disparity in pricing and the implications of financial reserves on sustainability.

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City Medicine Hat is fun when it's growing and things are happening. But also we can we can look at spending. We can look where we're not receiving value. We can look where we're we're having inefficiencies. And and I certainly have some, some ideas with that. This episode of Bring Back the Porch, brought to you by Bernie Leahy, River Street Realty. Let's get you home. And joining me on the porch this time is former mayor candidate Drew Barnes. Welcome, drew. Oh, Brian, thanks for talking to me today. Yeah. The last time we talked, you were in the heat of the campaign. I was it was. It was a good campaign. It was a fun campaign. I'm grateful for all the support I received and, grateful for the opportunity to. For Madison help. And now what have you been doing in the interim? Oh, grandkids and and some of my business interests and and spending time with my wife, Frances. Madison has such a great place to be. And is it is even if it is snowing today. So. Yes. You like me? We're following the last meeting of city council, which was, Boy, you talk about an information dump. There was an information dump there. The tri annual report, which comes out, I think, three times a year. The end of April, the end of August. So that was the second one. And when I was watching it, and as I listened to what was going on, I was like the guy in the Trivago commercial, you know, where they're checking out and the one guy is paying $500 for his room, and the other guy's paying 250. He goes, what? Wait. How? Yeah. You want to be the guy being 250? Well, I, I you know, the key metric in my head was like, we've got eight years of reserves and we're going to be out of money. And I went, what? Wait, how? Yeah, it was shocking. I, I'm kind of wanting to start, though, with, with three things. Very, very grateful for the support I got, a month ago in the, in the municipal campaign, tens and tens of people told me at the doors that they couldn't absorb another 5.6%, property tax increase before their assessments may go up and before the province may increase the education portion of your property taxes again. It was sad, Brian, when seniors told me they might have to sell their houses or they were planning on it, even. And younger families especially, that needed more, more income for their affordability. So that's where it starts with is, is we need city council and the mayor and the city staff to be cognizant of where our citizens are at. You know, secondly, there is a situation where the desire for growth in the city, you know, the fact that we have this great electric generation license, we can use that to attract industry. We need some kind of reasonable, manageable growth to increase that mill rate and, and make things happen. And then thirdly, and maybe most pertinent to this discussion in the last city Council meeting was the reserves. If we're going to burn through, you know, 28 or $30 million of operating reserves in the next eight years, and then look into even higher substantial property tax increases, which we may face anyway, this year because of some other spending. Let's look at, a way to address those sooner rather than later. And if that's, if we can't do it with growth, let's, let's look at getting our spending in line. And that's what citizens told me. They, they not only felt they couldn't afford another 5.6 plus tax increase, a lot of them didn't feel they were seeing value for this increase in taxes. Yeah. You have been on the, bandwagon. I guess you probably built the bandwagon even back in your days when you were an MLA, as you were always talking about fiscal responsibility. And here we are now, and it's staring us right in the face. Should the city be using its reserves, I guess is the question to to keep the taxes down. Is that the only option that we have? Oh, no, it's not the only option to to grow and increase our mill rate. Our tax base is, is that is the easiest option and maybe the funnest option. City medicine has fun when it's growing and things are happening. But also we can we can look at spending. We can look where we're not receiving value, we can look where we're we're having inefficiencies. And and I certainly have some, some ideas with that. We're so fortunate to have this electric generation license, first of all, the opportunity to provide reliable generation of electricity in a world of cell phones and data centers and cryptocurrencies. That's a real, a real opportunity for Medicine Hat. So let's go sell that and see what we can do. Secondly, you know, when it comes to to the spending in the reserves, I think it was over the last three years that we made approximately 300 million generating electricity and selling it to the rest of Alberta on the grid. Tens and tens of millions of that was put into separate reserve accounts. 75 million for getting ready for the energy transition, another 75 million for, abandonment of wells, the reclamation of those. Of course, that has to be done. And then some more into our, generational fund. You know, that money was recently, recently put in there. So, so I think it's okay at this point to, to look at taking some out, especially the, the, you know, 25 to 30 million that it's generating per year and in net revenue. So, so my plans in the campaign were three years of, no property tax increases. I think the best way to do that is to look for savings every day, but use the reserves in the first year. And by year two and three, let's get our spending in line and let's get some growth. We have to get some growth. And that was one of the key issues in the election campaign was economic development. But in the last four weeks I haven't heard a lot about that. No, I didn't hear much about that around the council table in their discussion. So we could go either it it seems to been again forgotten. Yeah. It, it's it's, it's, it's too bad and it's sad. And of course, we've heard about a couple of all the retail stores closing in the last while. And, and that's going to maybe accelerate. But, one of the reasons I like the idea of the three year property tax increase freeze is it gives the mayor and council something to sell. We've got the best people. We got great weather. We're a great community. But sometimes it takes a bit more than that when it comes to attracting investment and business. Brian, I also believe that this potential up to $700 million investment in a solar farm, using potentially all of our reserves, plus incurring some debt, is going to scare away investment just because it's a it's a future potential tax burden. So so I think city council needs to and that sooner rather than later. One of the items that they were discussing at the meeting was the,$16 million that they had to add, I believe, to, a fund to, I guess, pay for a new substation. Is that good money? Yes. That is that is good money. Our electric generation is essential. I understand that because this was delayed, because it was a bureaucratic process through the provincial government as well, that we weren't able to take advantage of some opportunities in the south part of the city, maybe especially, residential development opportunities, but but nonetheless, still opportunities. So. So the substation needs to happen. In a world of increasing demand for electricity, we need to be the leaders in generating and and selling to the rest of Alberta and Canada and providing affordable electricity for all medicine hat. That is, is a key is that we the people own that utility. And everybody says, how come we're paying, you know, the rates that we're paying. But at the same time, we also have to maintain that system. We can't kill the golden goose. Oh, absolutely. The upkeep is necessary. I, I on the long term strategic vision. So make sure we take advantage of our opportunities is important as well. And and the fact that the city was a bit behind on this on the substation, it's unclear to me whether it was the city's fault or the Easy's fault or the province's fault. But but let's get it done now and let's, let's, let's roll along. But we also have to be mindful of the fact that in a world of, of data centers and cryptocurrency, which are virtually the same thing, if we can attract job providing, manufacturers or income providers to Medicine Hat because of that, let's do it. And we need a strong relationship, a strong partnership with, with the provincial government for that to, if we need to look at, the limits of our electricity generation exemption license. And, we have the opportunity right now with Premier Smith. This is one of our two MLAs. Did we not do this 2017, 2018 with, the state? When they came in. We did something. Of what we did. Yeah, exactly. We we yeah, that's a good example. And it's it's provide, state and a sister style company up there is, is provided jobs and opportunity and got us on the map a bit. What we've done with it since, I'm I'm unsure. I haven't heard anything, but, Yeah. Let's use that as a base to expand. Are we not too late to the dance on this now, though, because others have been busy screwing around getting their ducks in order. I've got. Course they have. Well, you know, when's the second best time to start if you didn't start in the past. Start today. See where we're at. You know, we've we've got, I knew, you know, a mayor and eight new councilors for the most part. And, we've got city staff. Let's let's go find out what the opportunities are. What do you think is the future of natural gas? Because we have been seeing now, you know, they want to start exporting natural gas off of the, the BC coast. And I've seen some people who think that the price of natural gas, the value of natural gas is going to come back up again. I absolutely believe it's coming back up again. Natural gas stocks, on the stock exchanges, the prices of most of these companies is very strong right now, particularly in America where they have access, and a, a different, regulatory environment. I saw it at $4.45 3 or 4 days ago, on the long term price and, you know, medicine hats in great shape there. We've, you know, our, our gas field is overworked and under pressured for, for sure. But we still have 65,000 customers here in Medicine Hat plus, Radcliff and Cypress County. And we have opportunity there, too. And, again, to, you know, let's let's not forget that that's what built this city. This gas city. Gas city, Brian. And also the when the price of gas falls, that just means that, we can use a higher margin to turn natural gas into electricity. And, and I will say our electricity generation department has been very good at that the last 2 or 3 years. And, let them. Continue now, the city embarked on a path a couple of years ago to to shut down some wells. Maybe it's time to revisit that as well, instead of closing them in and spending money to abandon them, maybe get them back into production again. Yeah, yeah, I, I on the campaign, I heard so many tales and stories about about inefficiencies, about low producing wells that could have still had some life. So it's hard for me to know exactly what's accurate for sure. But but I think somebody and and again council and the mayor with, objective, you know, fair minded, opinion needs to look at that and see what our opportunities are. Okay. Now, when we take a look at, one of the issues that they talked about and they only talked about it very briefly, and I think it was Councilor Younger brought up the full time equivalencies of how many people work at City Hall, and he was scratching his head trying to get a handle on it. He said, you know, corporations can tell you, like right now, how many people they have in the city was like, well, they're doing their businesses and stuff and they have to get back to us. Did you hear anything during the campaign about how many people are working for the city medicine that and whether we are over balanced in terms of the number of people we're employing or we need more? Yeah, I, I, I heard lots of stories about inefficiencies and underutilization of good people, for sure. I heard 1600, almost 1600, employees. And for a city this size, that's that's mind boggling. I believe it's something like 70 positions that are unfilled right now. And then there is considerable number of nonunion managerial positions. So so again, I think to to prevent tax increases, property tax increases and help our, our neighbors are really needed. One of the first things to do is let's make sure that those 69 positions that are unfilled are necessary to fill. Let's make sure, Brian, that that money hasn't been put into the budget and isn't retrievable. I mean, if the positions empty, that money doesn't have to be spent and should be returned to the taxpayer for this year's budget. If it let's look at the necessity of those managerial positions. Let's make sure that, you know, they're productive, necessary and adding value for the taxpayer. And then I would also say that, you know, the number compared to other municipalities is high. I would encourage the, the mayor and the council and our good city managers to come up with the, early retirement, potential for, for city employees. You know, let's be fair to everybody that works there. Absolutely. But, if somebody is close to retirement or wants to take an early retirement and take a small package, and we can prove that we don't have to replace that person, let's offer some incentive and and let's start to let's start to get the size of the city in line with a city that hasn't grown in ten years, you know, until somebody can return some growth. The other metric that jumped off the page, was the severance payments. And I know a lot of people on social media were going, what? We're paying nine people, $1.1 million in severance. And again, back to the Trivago. Yeah. What? What? Yeah. How? Yeah. It seems it seems unfair compared to what's available in the private sector. It seems a burden on the taxpayer at a time that the property taxes are going up at a time that the affordability crisis is hitting us all to the front and center. I think that those contracts have to be reviewed. I think we need a new mechanism and a new situation. So severance is is more fair. When we look at, the other shoe that has to fall now, the utility rates that they're going to be setting in, in December, the one that really, has got people's hackles up is the municipal consent access fee. I know that you have to say on that. I sure do it in people's people should be upset about it. It's just a tax. It's normally in a situation in a town that doesn't own their own electric generation, their own utility, and they charge an access fee for core and max direct energy, whomever, to come in and provide the electricity. Medicine hat. We don't have a choice where we can go go to, in the long run. In the long run, though, we have this great opportunity to to generate electricity for the rest of Alberta and make money off it, we have this opportunity to provide, lower costs for for medicine, hatters and medicine and businesses. I think I absolutely I think that municipal consent access fee, the he has to be eliminated is just a tax. And, again, with the 150 million put into reserves for, getting ready for energy transition and abandonment of wells, perhaps we can use that as an offset until we can get our spending in line. Really? Because the mCAT pays for people who are already working, doing jobs on the city payroll. So it's like a double dipping. That's a good a good comparable. It sure is. Brian, you know how many times I heard on the campaign knocking on doors where people would say, hey, you see my utility bill, my fees are higher than my usage. You know, I asked my kids to to be respectful. I'd be as respectful as I can, and I can't see because my fees are set. And how how is that a world that's anything environmentally friendly? That's not fair and it's not affordable. So let's let's have the courage to make that change. Here's another example. I know you can't change it, but, I'm on a condo board, and I see our utility bill for the city to pay for our whole complex. And there's a municipal consent access fee there. And then my individual utilities, there's also the consent. I'm paying twice. So now they're almost quadruple dipping out. Yeah. Yeah, yeah, it just, there's, you know, condos are a great way for a lot of us older people to live. And, there's been so many inequities. Oh, I remember when the province, years ago put in a subsidy for high electricity rates. They were unable to get it to condos that weren't individually metered, which which surprised me. Just come as close as you can. But that's another perfect example of of more and more money being poured away. People are people are frustrated and upset that they're not getting value for this. Brian is at a time that, you can barely afford a steak at the store. Yeah. Know one of the things that, struck me, watching that council meeting from the 17th of November was, Ted Cluxton and how he was comparing how things were done when he was in charge and how things are today. And it is there is there is a big difference. There are. Do you see maybe something going back towards the old way or do you see it? Maybe there's going to be some politicking. Well, politics is such a part of life, especially be the Civil Council. So sure, there'll be some of that, but I'm glad to have Ted back. I'm glad to have Ted's expertise and his his fiscal conservative values. Yeah. I mean, just because we did it ten years ago doesn't mean it was wrong. Some of the smartest things were things that our grandparents did. So so I would I would ask, you know, the mayor and council when when Ted or Bill Cox or Brian Varga or any, any idea that comes up this good? Respected. Yeah. What do you think the future of this, council will be? And our city. Well, the next four years. The future of the city is bright. I mean, I mean, we're the best place to live, people. Whether, you know, I wonder about our location. Sure. We're we're not in that major artery between Edmonton and Calgary or even south of it, like Lethbridge is. But we're on two busy highways where, you know, we're we're next door to Saskatchewan, which which is, is really a large part of Medicine Hat. So, so the future medicine hat is bright Council. Well, council will I'm cheering for them. I'm hoping that they are able to to remember what, you know, tens of, hundreds of medicine had just told us at the doors and in my case, 50, 100 people voted for me that believed in a three year property tax increase freeze, believed in reasonable, manageable growth of 2000 to 3000 people per year, no development levies and believed in, you know, medicine had, Coming up with a way to help. The homeless, but holding vagrancy and criminal activity accountable. They do have a lot to do over the next four years. And I'm pretty sure that you and I will be watching from the sidelines with our popcorn, about that. But yeah. Yeah. And let's talk about that for a second. I, I was surprised at the turnout in the election was only 37%. Now, my goodness, I heard Lethbridge was 20%. Yeah. You know, it's always odd to me that federal election will have about 75% turnout. Yeah, it's it's a crucial who runs Canada. But Ottawa's a long way from here. Provincial election. A good turnout will be about 55%. But in municipal, the the opportunity to be involved and shape your city. I'm surprised that, the turnout wasn't wasn't higher. I heard some frustration with some long lineups. I heard some frustrations with, with, you know, with how hard it was to know where to vote. It's one of the reasons I'm cheering for you guys here at, you know, bring back the porch. We're in kind of a media desert right now, you know, with with losing chat after all those years of good, communication. So, we, you know, we need some ways to get the word out for all medicine matters. Well, we will do what we can with the resources that we have, because like everybody else, you know, funding is limited. I'm sure that we'll talk again, drew. Brian, thank you very much. I so appreciate your time. Thank you.