The central Alberta community of Gibbons’ status as a town hangs in the balance as a series of bad financial decisions have jeopardized its future and left it hurtling towards insolvency, according to the town’s mayor and council.
Town officials, including interim chief administrative officer Tim Duhamel, presented information about the town’s financial situation to Sturgeon County’s mayor and council on Tuesday morning.
“We’re in a terrible situation right now, unprecedented for sure,” Gibbons Mayor Rick Henderson said.
“The situation isn’t in thousands [of dollars, and] it’s not the hundreds of thousands of dollars — the situation and the issue is in the millions,” said Duhamel who presented the update on the town’s finances alongside Henderson.
“And for a town of this size, that’s incredibly challenging to overcome.”
Gibbons is one of five municipalities that exist within the geographic boundaries of Sturgeon County.
Duhamel, who founded the Bloom Centre for Municipal Education, was brought in by the town to help clean up the municipality’s finances along with two other people from the centre.
Through ministerial order, the Alberta government appointed Harold Johnsrude as the official administrator for the Town of Gibbons in December.
Johnsrude will supervise the municipality and its governance under the authority granted under sections of the Municipal Government Act, the town said.
Duhamel and his team at Bloom are investigating the full extent of the financial troubles plaguing Gibbons.
He told Sturgeon County officials that the issues have developed over multiple years because of a compounding operating imbalance, the depletion of reserves and an increasing reliance on operating debt.
A project that officials have pointed to as contributing significantly to the town’s financial crisis is the Heartland Station commercial shopping district.
“Approximately $4 million of money was spent on that which was not fully recovered,” Duhamel said. “And again, that’s under review.”
As part of short-term efforts to address the situation, Duhamel said discussions are ongoing with Alberta’s Ministry of Municipal Affairs.
Some measures that have been taken as a result of those discussions include the doling out of a $500,000 Alberta Community Partnership grant and negotiated deferred payments to the provincial government.
The town has also laid off five staff members out of its team of 35 members.
CBC News has requested an interview with Municipal Affairs Minister Dan Williams to discuss the issues.
Bloom estimates an immediate cash injection of approximately $2 million would be required to maintain service levels already budgeted for in 2026.
However, based on current assumptions and forecasts, Gibbons would still face an estimated cash shortfall of approximately $3.4 million by year’s end, according to Bloom’s calculations.
Gibbons’ current town council, which is made up entirely of people who are new to municipal politics, emphasized that as soon as the gravity of the financial situation became apparent, action was swiftly taken.
“The steps of controlling and watching what we spend … happened probably the second we got in there,” Henderson said. “As soon as we realized exactly how bad it was, we pulled on the fiscal restraint belt in a hurry.
“To give you an idea of where it’s at, we had to fight to get toilet paper for the arena, and to find the money to get toilet paper for the arena. That’s how tight it is, and that’s how much we’re watching our funds right now.”
CBC News asked Gibbons’ mayor, council — and Duhamel — why the situation was a surprise given financial statements are public.
“What we’ve been able to see is that there were some concerns brought up by the auditor, and I think they even said some red flags,” Duhamel said.
“But for the most part, we feel that the message from the auditor maybe wasn’t strong enough or well understood by the council and the administration.”
Sturgeon County has accepted a request by the provincial government to participate in an expedited viability review of the Town of Gibbons, which will not include a review of infrastructure due to time constraints.
The viability study will be conducted by the province in the coming months, and will examine the town’s state of governance and finance.
Henderson said once the viability study is conducted, the town may need to vote on whether it should remain a town, or if it should downgrade its status to a hamlet within Sturgeon County.
Many on county council had questions about the potential hit to taxpayers if the county were to absorb the town.
“I do have concerns about contributing taxpayers’ dollars to a place where, historically, there have been questionable decisions made,” said Sturgeon County Mayor Alanna Hnatiw. “If you’re too far into a hole, how do you get out?
“The challenge around saving someone who’s drowning, you don’t want to get pulled down with them.”
Gibbons officials and Bloom are also exploring the potential transfer of fire services, family and community services as well as sharing revenue with the county.
Gibbons town hall
At a town hall Tuesday evening, residents of the Town of Gibbons heard from council and administration about alternative plans as the municipality faces the possibility of insolvency and dissolution.
Duhamel presented a list of options to save the town some money.
Options for financial cuts included the elimination of some community programs and services, closure of the town gym, ending some beautification projects and reductions to bylaw enforcement services.
While councillors said they recognized that cuts need to be made, they were hesitant about reducing services.
Coun. Darrell Burak said he had some particular concerns when it comes to making cuts.
“My personal belief is that once you start taking youth organizations and then closing doors on them, I think that’s where we potentially have more issues,” he said.
“I think that’s a very valuable resource for the town. I definitely wouldn’t be behind eliminating that.”
Many said they wanted to see a more in-depth analysis in terms of the cost savings if such cuts were to be made.
Residents were also informed about the meeting earlier that day with Sturgeon County.
Henderson and Duhamel both acknowledged that the impact on county residents — if the county were to absorb the town — is not yet clear. However, they also agreed that the presentation to Sturgeon County was well-received by the county.
“It’s clear that they were appreciative of the transparency aspect of us giving them the full gamut,” Henderson said.
“Hopefully we can continue moving forward … [with] that collaborative nature.”
