"Why does the City of Cold Lake Have to Raise Tax Rates?"
The City of Cold Lake has faced growing financial pressures that have made municipal tax increases necessary to sustain operations, services, and infrastructure. These pressures stem from population growth, changes to RCMP funding, downloading of responsibilities from higher levels of government, inflation, and Cold Lake’s commitment to maintaining quality municipal services.
1. Population Growth and RCMP Policing Costs
Cold Lake’s population has officially surpassed 15,000—a milestone that significantly changes how policing is funded:
RCMP Cost Shift: Once a municipality exceeds 15,000 residents, the federal government reduces its subsidy for RCMP policing. As a result, Cold Lake must now pay up to 90% of the cost of RCMP services, up from approximately 70% before.
Retroactive Pay Increases: In addition, the federal government negotiated a retroactive pay increase for RCMP members, dating back several years. Although the federal government made this decision, municipalities like Cold Lake were required to cover these additional costs—with no input or negotiation at the local level.
Budgetary Impact: These combined changes—higher cost share due to population growth and the sudden imposition of retroactive wage increases—have added millions of dollars in unplanned expenses to the city's operating budget.
Policing is one of the largest and most essential line items in any municipal budget, and these external decisions have created a significant financial burden that directly contributes to the need for higher local taxes.
2. Downloading of Federal and Provincial Responsibilities
Municipalities across Alberta are increasingly being asked to take on responsibilities that were traditionally managed by the federal or provincial governments—without corresponding increases in funding:
Examples of Downloaded Duties:
Social services and housing support
Infrastructure responsibilities with reduced grant support
Environmental monitoring and enforcement
Mental health-related supports
As these responsibilities are downloaded, municipalities like Cold Lake must cover the associated costs using property taxes—the only major revenue source available to them.
3. Inflation and the Rising Cost of Infrastructure and Equipment
The costs of maintaining and replacing city assets have risen significantly:
Infrastructure Inflation: Construction materials, roadwork, utilities, and facility upgrades have all seen cost increases due to inflation and supply chain pressures.
Fleet and Equipment: Replacing heavy equipment, fire trucks, snowplows, and other fleet assets has become more expensive, often with longer procurement timelines.
Failing to adjust tax rates to keep up with these costs risks the long-term condition of roads, utilities, and public facilities.
4. Maintaining Service Levels for Residents
Cold Lake residents benefit from—and expect—a high level of municipal service, including:
Emergency services, fire and police protection
Road maintenance and snow clearing
Parks, trails, recreation, and community programming
Utility services and waste collection
To avoid cutting back or degrading these services, the City must ensure adequate funding through property taxes.
5. What Happens if Tax Rates Are Held at 0% or Lower for Too Long
Prolonged periods of frozen or reduced tax rates can have serious long-term consequences:
Depleted Reserves: The city would be forced to dip into emergency or capital reserves, limiting its ability to respond to crises or invest in future infrastructure.
Deferred Maintenance: Putting off infrastructure repairs leads to higher costs down the road.
Service Cuts: Staff reductions and program cuts would be required to balance the budget, affecting quality of life.
Unsustainable Catch-Up: Years of underfunding can lead to a sudden, significant tax increase—something Cold Lake has experienced before.
6. Increases to the Provincial Education Tax
Another significant cost pressure on property owners comes from the provincial education property tax, which is set by the Government of Alberta, not the municipality:
Sharp Increases: In recent years, the Alberta government has substantially increased the education tax requisition, with another sharp increase forecasted for the upcoming year.
Municipal Role: Although this tax is included on municipal property tax bills, the City of Cold Lake has no authority over how much is charged, how it is calculated, or where the funds go. The municipality is legally required to collect this tax on behalf of the province and remit it in full.
Public Misunderstanding: This often leads to confusion among residents who see their property tax bill increase and assume it is a result of municipal decisions—when, in fact, a large portion of that increase is being driven by the province’s decisions on education funding.
This further reduces the City’s flexibility in managing tax burdens locally and adds to the overall increase seen by taxpayers—even when the municipal portion is carefully managed.
7. Historical Context: The 30% Tax Increase in 2007
In 2007, Cold Lake was forced to implement a 30% tax increase after years of holding the line on property taxes. This dramatic increase became necessary due to:
A rapidly growing population and economy placing strain on local infrastructure and services
A backlog of infrastructure needs and rising service demands
Inadequate funding from other levels of government like PILT and ID349
The 2007 increase is a clear example of how keeping taxes artificially low for too long can lead to a sudden correction with a much larger financial burden on residents and businesses.
Cold Lake’s recent tax increases are based on economic and structural realities, not political preference. Factors such as increased RCMP costs due to population growth, provincial and federal downloading, inflation, and aging infrastructure all contribute to the need for additional revenue.
If tax rates were held at zero or negative growth for too long, the city would face service cuts, deteriorating infrastructure, and eventually, the need for a large and sudden tax correction—just as it did in 2007. Responsible, measured tax increases allow the city to plan long-term, preserve service quality, and remain financially stable.