2024 Spring Budget Adjustment

Tuesday Apr 23, 2024 Council is set to deliberate our annual Spring Operating Budget Adjustment.

In 2022 we set the 4-year budget (2023–2026) and each year we have the opportunity to reassess priorities and respond to emergent needs in our Spring and Fall budget adjustments.

I recognize that Edmontonians are struggling with inflation pressures and rising costs at home and are looking to Council to be prudent when it comes to setting the tax rate.

The City’s Operating Budget funds over 70 services including the emergency services, parks, roads, trails, bridges, recreation centres, attractions, social supports, and transit that we rely on and use every day. It also helps fund our priorities related to community safety and well-being, transportation, climate, affordable housing and homelessness.

The adjusted budget proposed by Administration reflects a 2.1% increase over what was previously approved last fall (8.7% vs 6.6%).

Let’s break down the sticker shock in daily terms: at 8.7% the $8.74/day in property taxes we use daily will increase to $8.96/day, so a $0.22 daily increase for the average home in Edmonton (which is roughly $425,000).

Municipalities across Canada are struggling with the pressures of inflation, unprecedented population growth, and recovery from the pandemic. Comparatively, Edmonton still remains one of Canada’s most affordable cities and we have consistently collected property taxes at a lower rate.

For example in last term’s 2019–2022 budget cycle, the property tax increases (and freeze in 2021) were the lowest increases in 25 years.

At the time, the 2019 increase was the lowest increase in a decade (2.6%). In 2020, the increase (1.3%) was the lowest increase in 23 years. In 2021, the tax freeze (0%) was the first time that occurred in 24 years. Finally for 2022, we had the third lowest increase in 25 years (1.9%). All of these were below the rate of inflation.

But you might also remember that in 2020–2021 we closed rec centres, reduced attractions and events (no fireworks!), stopped mowing the grass, and reduced our snow clearing–all things that in the bigger picture, didn’t make Edmonton an attractive place to be.

We need to find a balance between keeping property taxes manageable and delivering the services and construction projects that make Edmonton a great place to live, work and play.

Council and the City have worked hard to find efficiencies and savings to keep taxes manageable without significantly impacting services. Since 2015, these efforts have resulted in a cumulative savings of $1.9 billion.

The average tax increase in the last decade (2014–2023) was 3.3%.

During the pandemic, the City kept tax increases below inflation, including no increase in 2021 and a 1.9% increase in 2022, which was the lowest increase among major cities in Canada.

In 2026 the operating budget will increase from $3.6 billion to $3.9 billion. Mostly to fund our basic, core services because the City is also impacted by inflation and increased costs like fuel, utility, and construction costs. (Did you know that Edmonton collects roughly $1 Billion dollars less in property taxes than Calgary?)

During the 4-year budget, Edmontonians told us that we needed to invest in our shared priorities. Council added $142.4 million in new funding for programs and services in the 2023–2026 budget, like more affordable housing, more transit service, more snow and ice control, and energy transition and climate adaptation initiatives.

SO why are my property taxes going up to 8.7% from 6.6%?

Since we discussed the 2024 budget last fall, we have encountered higher WCB premiums and we have a better understanding of longer term labour costs.

0.3% of the increase is needed to cover increased WCB premiums.

Around 1.8% of the increase is needed to address a variety of new costs including the labour settlement with one of the civic unions and continued inflationary pressures that every household, business, and public organization is facing.

We also have costs related to rapid population growth that is at the highest level that we have seen in over 40 years and the highest ever yearly population growth in the city’s history (65,000 in 2023).

Part of the property tax pressure here comes from massive reductions in provincial funding (both operating and capital).

The current financial challenges we (and all municipalities across Alberta) face are partially related to the lack of consistent and equitable support from both the Provincial and Federal government.

For example: provincial funding for local infrastructure dropped from about $424 per Albertan in 2011 to about $154 per Albertan today — all while demands for municipal infrastructure continue to grow.

Other regional factors are at play here. Edmonton’s geographical location and status as a service hub for a larger regional population and for northern Alberta (as well as northern British Columbia and the Northwest Territories) means we bear a disproportionate impact of these provincial policies or budgetary decisions.

For example: healthcare is a provincial jurisdiction but we’re covering the costs of emergency medical services through Edmonton Fire and Rescue to the tune of around $28 Million annually.

There is no equity in funding for Alberta’s largest municipalities, currently Calgary has received 17$ Million dollars more in per capita infrastructure spending.

Additionally, the Province doesn’t pay property taxes on their government buildings here in Edmonton, previously they would pay these costs back to the municipality in grant funding but they have not done this since ending our funding Charter agreements in 2018.

(That’s 60 Million dollars in property taxes we could use to offset costs for Edmontonians.)

What has the City done to reduce costs before recommending a tax increase in 2024?

Over the past decade, we have gone through a series of intensive budget reduction and efficiency exercises to keep tax increases as low as possible. It’s now part of our normal budget process to find cost savings and efficiencies.

I know some people feel we shouldn’t invest in projects like bike lane expansion for example. Would cancelling the bike network expansion meaningfully reduce the tax rate in 2024?

Unfortunately, no. This project is paid for through debt financing over a long period of time, so cancelling it will not make a significant difference to the tax increase. This year the debt-servicing cost will be $749,000, which is only 0.02% of the $3.3 billion annual operating budget.

Since 2015, reduction efforts have resulted in a cumulative savings of 1.9 billion dollars and reduced our required tax increases by 21.5 per cent.

To achieve no increase in 2021, we made $50 million in reductions, including program changes, efficiencies, staff reductions and temporary facility closures.

In this budget cycle, the OP 12 amendment reduced the City’s operating costs by $15 million a year from 2023–2026, which reduced our recommended tax increases by about 1%.

And in March, Council approved another $8.2 million in savings from “OP12” we will see realized as future savings and contributions to our Financial Stabilization Reserve (the rainy day fund).

I believe that we have strong financial plans and policies in place and we will continue to be measured in our response to monetary challenges. In fact, our city has a AA credit rating from S&P Global due to prudent financial planning.

I am committed to working with my Council colleagues to deliver the best services for Edmontonians that make our city such an attractive place to call home.

As always, I welcome your feedback on how we make our vision a reality as part of Edmonton’s future.