Those of you who are tech savvy people may have noticed a new Red Deer Debt Clock popping up on your sidebar of your facebook page periodically. As someone who is considering running for council in the October 2013 race I have taken it upon myself to make Red Deer citizens aware of just how deep in debt Red Deer is.
As of Dec. 31, 2013 (the end of this year), the City anticipates to hold $258 million in overall debt. Since the ad is simply numbers a sitting councillor has asked me the following.
“Provide some context for your numbers. What do they mean to you?”
Here is my response: my personal feelings regarding the debt are fairly meaningless. However as a hopeful representative, the realities of the trajectory of the debt are very meaningful to potential constituents.
It has been pointed out within council that the debt will 73% of the City’s debt limit by 2015. This is a huge concern to me and should be to all, regardless of whether one believes the City should use debt as a tool to finance capital.
If the trajectory continues the debt limit will be reached in no time. If council refuses to stop the spending the City has a few clear cut options (recognizing that options aren’t limited to the following).
Go to the province and ask for a raised debt ceiling (sound familiar?) Increase receipts (taxes) by approximately 15-20% in 2017 so that the City can continue in the same spending trajectory.
Go into austerity mode cutting services so that we can afford to carry the debt.
If an individual puts together their personal financial books and realizes that within their current spending trajectory they are going to default on their mortgage within the next six months would one expect that individual to continue with their spending and then attempt to solve the problem in six months? Absolutely not. The spending trajectory needs to be dealt with immediately before it becomes a real problem.
I personally have a hard stance on City debt. I do not believe that any governing body should be allowed to carry debt for it manipulates the taxpayers into believing they are getting good services for their money, when in fact it is their children paying for the current service level.
However, I do recognize that others believe it is wise to spend on capital while interest rates are low. I am willing to work with that but within the confines that our fiscal situation remains solvent without substantial tax increases, or austerity.
If we begin to deal with the spending problem today we can avoid both those options. At the end of the day we need to ensure we live within our means to protect the citizens that council represents.