Paul Harris

One Bright Sheep

One Bright Sheep is all it takes.

We often talk about two levers we have at our disposal to manage a balanced budget. Those are:

1) reduction in services and programs and,
2) increase taxation.

The community has asked us us for two things. Firstly: do not reduce services and programs… in fact increase them. Secondly: do not increase taxation but if you must request an increase please be certain it’s not greater than the national CPI levels annually.

How do we apply these competing options? I think we do that in two ways.

Firstly, we manage our expenses as appropriately as we can.

* We look at the real cost to provide service whether that is road provision or building new facilities. Indeed the new accounting standards that all municipalities have adopted will go a long way to help us understand the real cost of decisions. They require municipalities to capitalize infrastructure, buildings, and other assets and record yearly depreciation. Before 2009 municipalities were allowed to record most of these items as operating expenses and so a true picture of infrastructure decay was not readily available. We’re now able to build appropriate reserve funds to handle repair and replacement of these based on this information.
* We also push out our capital plan further and delay projects. In order to keep below our debt limit and to avoid high increases in taxation we must put on hold a number of projects and amenities that the community requests. These will come in time as capital reserves are available.

Secondly, we think about taxation in responsible ways.

* There is a philosophy to take “only what we need,” but this means increasing fees and taxes. Even small increases are not easily understood by the public. There are many many factors that aren’t under control of government. I’ll save that for another time.

So that is the background and it leaves us in a bit of a pickle. We want to increase service level and provide new amenities, but we also need to keep taxation down.

There is a third lever.

I believe we have three levers when we consider the budget. The first two are a little more understandable, the third doesn’t get as much attention as it deserves. Our third lever has an economic development focus.

3) Increase revenues without increasing taxation.

This is where innovation in economic development strategies could play such an important part.

Former Councillor Larry Pimm was known for his stories and analogies. I found it very useful as I watched Council work through ideas and challenges and promised myself that I would try to remember the importance of a narrative.

A couple of years ago I was in northern England.

Like people that want to be with the horses when they come to Alberta, I was quite curious about the sheep I saw all around. I had to get up close and see what these creatures were like. We stopped at a number of pastures throughout that visit. I really wanted to get some pictures of sheep fairly close up.

Not only are sheep cute up close but I discovered they are fairly bright creatures. I’m sure some will disagree. Sometime during that week I heard this story. Many years ago, sheep flocks used to be contained on pastures with stones walls high enough they can’t get out. The entrance to the pasture consisted of several bars of iron across a ditch, very much like our cattle grates in Alberta.

The sheep wouldn’t cross that gate.

One day a particularly bright sheep perhaps was thinking that the green pasture would be richer on the other side. Perhaps it was sick of the same old diet. Maybe the cowslips or other wild flowers looked particularly appetizing. For whatever reason this one sheep discovered that if it were to lay itself down beside the grate and then roll across the grate on its back it could escape the pasture.

One bright sheep, very clever.

Here’s the interesting thing. How animals communicate is unclear? Perhaps some collective consciousness. Within a few months all of the sheep in England could no longer be contained with sheep gates. They all had learned from one another to escape the pasture and take full advantage of the other side.

Farmers were quick to adapt and installed a new type of vertical gate that sheep couldn’t physically negotiate.

If we could understand the language of ‘sheep’ we’d probably discover that they are plotting their NEXT big escape.

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In this analogy I’m not assigning roles to anyone… there is no shepherd here. We all, the community, Council, and administration are the sheep. When one of us learns something new let’s find a way for us all to learn it.

The fence and the sheep gate are the paradigm that we’ve all been functioning within. Just like the sheep, we have been fenced in by our own thinking. We believed we had two choices, that our menu is limited. We either reduce services, or increase taxation.

Bright Sheep Projects

The brownfield initiative will bring back a revenue stream on sites which we’ve been losing. By recovering these we are neither reducing services or increasing taxation.

Another project is leading the way on work which will attract residential and retail development to the downtown. This will have the effect once again of increasing revenue without either reducing services or increasing taxation.

These are only two of many projects that have begun in 2011. City Council’s new focus on Economic Development within the city will demonstrate many more projects that make great use of our existing assets.

The great thing about these projects is that they both have an effect, not only by increasing our revenue options but also by reducing expenses. One simply example of this is the reduction in crime rates, and all that is associated with them. This results when districts become more active and cared for.

Old Restaurant Fire.

Let me share with you a couple of examples, firstly the location beside Gaetz Avenue church on Ross Street. It has been vacant for at least 12 years. The basement space has been problematic for crime and bullying. The owners have had to keep it fenced. It does nothing to enhance the downtown or to invite visitors and new investment.

What if we had created policy, investment, incentive, and encouraged it’s redevelopment many years ago. How would that space look different now? We could have had new retail and residential thriving today. It could be generating strong tax revenue for the community and enhancing the downtown.

Eclectic Market.

Another example is an abandoned building on Gaetz Avenue two doors south of Potter’s hands. It sits boarded up and vacant and has for years. The tax revenue we receive from that property is insignificant. What’s worse is that this building is being used for storage and is poorly maintained. We know that buildings like this have a higher risk of fire. This could be an example of demolition by neglect. Again, it has a negative effect on our community and at the same time isn’t contributing to what should be a thriving street.

These are just two examples in our community of opportunities that exist to increase service to the community by helping useful development occur, and at the same time not having to increase taxation.

I’m sure there are many many opportunities not exactly like this but similar. We can attract new investment, that positively impacts our community. New investment will result in new revenue, and better use of our existing assets. In a time when we struggle to find all of the funds we need for new capital assets, such as: bike lanes, connector roads, concert hall, new library branches, we’ve had to push out many of these projects into the future.

If we could create new revenue through “one bright sheep” initiatives we could foster better service, reduce taxation, or bring pull forward some of the capital items that we’ve pushed out.

Instill

I hope that we can instill a strong sense of economic development at the department level. I believe that we should have three levers to handle the budget next year.

1) Manage our expenses as appropriately as we can. Which, I think we are doing fairly well with. Certainly, we have enough border collie in our group to keep an eye on expenses.

2) Increase taxation only as much as is needed. Compelling cases are being made for increased taxation. Even at the moderate level of 3.98% there were many requests from departments for worthwhile projects and programs that would better our community.

3) Increase revenue through finding opportunities to better use and market of our community resources. These are economic development opportunities within our City, that will both offer something new to the community as well as improve our tax base without major development of infrastructure.

Teach one another to cross

I hope that we’ll be like these bright sheep and that every department will learn from one another how to cross the sheep gate for greener pastures. To continue to foster innovation and transformative thinking.

The work we are doing with the Central Alberta Economic Partnership and Red Deer Regional Economic Development are very important from a growth perspective, and the new developments in the City are important, however we must remember that:

New developments come with new expenses.

We need:

New developments that come with few expenses.

An economic development plan that explores local opportunities, within Red Deer, would have a major impact on our revenue stream with a lesser effect on our expenses. I believe that we should be pursuing this avenue with vigour.

One bright sheep ideas don’t just relate to land development, they look at all of our assets and try to find ways to turn difficulties into opportunities. Expenses into revenue. Weakness into community amenities.