2016-18 Operating Budget
Edmonton 2016-18 Operating Budget
Let’s talk about the budget.
The budget process is quite different from the other orders of government in that almost everything is debated in public for all to see. It’s a messy process but I greatly prefer it to the alternative of debating everything behind closed doors and simply unveiling a completed budget. For those that want to experience what we just experienced, you can always watch our Council meetings online. For everyone else, I thought I would provide my thoughts on why I supported the budget. My apologies in advance as this will be a lengthy write-up but I hope to provide context behind most of the decisions that took place. Those interested in reading a portion or all of the 2016-18 Operating Budget can visit this site here
This is the first time Edmonton has used a multi-year operating budget and the purpose of moving to a multi-year budget is to provide a greater degree of certainty for everyone. This budget was approved unanimously by Council and will result in a 3.4% increase in 2016/2017 and a 4.8% increase in 2018. I will provide some introductory information, breakdown what makes up those percentages and add my commentary on specific areas. For reference, approximately 1% is the equivalent of $13.7 million in 2016, $14.7 million in 2017 and $15.6 million in 2018.If you visit the link above and click on “2016-2018 Proposed Operating Budget Overview” and read pages 20-35 you will be able to see what the Administration has done in the last year to find cost savings or efficiencies in the organization. This is an important section because time and time again I am asked by people, “What is the city doing to save money or be more efficient?”
For the first time, there is now a detailed answer to that question. The savings found in that section make up $10.1 million and was available for Council to reallocate. It is important to note that on top of that $10 million, the Administration was able to reallocate $20 million - through revenue increases or efficiencies found - to other priorities in the city. For example, Fire Services was able to cover 20 of the 25 staff for the new Rossdale Fire Station by finding efficiencies and reallocating resources. That meant that they did not need to request an additional $2 million in 2016 because they worked hard at finding efficiencies within their branch. Is the city as efficient as possible? Of course not. There will always be opportunities to be better and at the end of this I will provide some information about a motion made to complete a full program and service level review.
In each of the next three years 0.8% of the tax increase is required to pay for our portion of the Valley Line LRT. Although the Valley Line LRT falls under our Capital Budget, the payments to cover the cost of borrowing are paid for out of our Operating Budget. Having a proper LRT network serving all parts of our city is critical for our long-term success as a region so in my opinion, this 0.8% is a requirement because the alternative is continuing to fall behind in LRT construction in Edmonton. Pages 45-53 of the same section referenced in the previous paragraph covers the Operating Impacts of a Growing City. 0.9% of our tax increase this year is required to address the operating requirements of capital decisions made last year in our 2015-2018 Capital Budget.
The Capital Budget deals with major infrastructure like Police and Fire stations, the LRT, rec centres, etc. As we continue to grow further out, we are required to build critical services like police and fire stations and the staffing cost for those new buildings is substantial. In 2016 we will be opening a new Fire Station in Pilot Sound which requires $1.452 million in staffing costs and we will begin hiring and training police officers for the new Northwest Division which requires $1.705 million in staffing costs. All the items that make up that 0.9% can be found in those pages but these are a couple of the examples of what makes up our operating impacts of capital.0.7% of the tax increase is made up of the $10.1 million that the Administration found for Council reallocation. There were a number of things that could have been with this, we could have reduced the tax increase to 2.7% increase or used just a portion of it. So what did we spend that $10.1 million on? Was it all that important? I’ll let you be the judge. By visiting this link http://www.edmonton.ca/city_government/documents/PDF/FINAL%20-%202016%20-%202018%20Operating%20Budget%20Amendments%20and%20Motions.pdf you can review every amendment that was put forward. Each line item shows you the Councillor that made the motion (seconders are sometimes passionate about an item and some just second a motion to allow the debate to happen).
The majority of the motions I seconded I did in order to allow them to be debated as that is simply good process. Although with that information, you can see what the outcome was and who voted for and against each item. I won’t go over each item but I will cover off the ones that had the highest dollar values as well as a few other ones that are - in my opinion - important issues that should be discussed. The largest item within the $10.1 million is the almost $3 million for the Edmonton Police Service (EPS).
On the site I referenced at the beginning, you can read each department’s budget submission and within each branch there are often “Unfunded Service Packages.” These packages are typically items that did not make the final cut from Administration but they felt it was important enough for Council to have an opportunity to debate it. There are a number of other service packages that didn’t even make the cut to be unfunded. The challenge with EPS is that unlike other city departments, Council cannot actually direct EPS on how to use their funding. This created a somewhat frustrating situation where there would be many unfunded service package included that are very challenging to say no to. It’s not that we don’t want to provide the necessary support to the police but even when it’s a department that focuses on creating a safe city we still need to make sure it is being done efficiently. The Edmonton Police Commission exists as the oversight body which ensures Council is in compliance with the Police Act. I want to give credit to Mayor Iveson who was able to create a formula that would allow EPS to deal with future growth while at the same time providing Council with more certainty around their budget. This formula is % Population Growth + % of Inflation - 0.7% for efficiencies (which we ask of every department).
This new way of doing things passed unanimously which is why $2.803 million of the $10.1 million was required. If you read that section where the Mayor made his amendment, you will see that I made an additional amendment that lost 11-1 where that formula would start in 2017 instead of 2016. My thinking behind this relates to another amendment totaling $1 million. Councillor Loken put an amendment on the floor to fund the REACH Edmonton 24/7 Crisis Response team. This was originally for $500,000 and I amendment that amendment (that’s the procedural way we do the budget) to increase the funding to a total of $1,000,000. The details of this package can be found by visiting the link at the beginning of this post and clicking on the “Boards, Commissions and Other Entities” section. Page 650 has the metrics to show the benefit of this program and I felt that by letting them go beyond the greater downtown, they would be able to have an even greater positive impact to our police service. Instead of EPS staff responding to a social disorder call that pulls them away from other policing duties for an average of 3.3 hours, I felt expanding this team could help us see a more substantial savings on the EPS budget.
Although my amendment to increase the funding for REACH passed 7-5, the amendment to not start the formula based funding for EPS until 2017 failed. Page 442 of the “Sustainable Development” section covers $1.304 million for our Energy Transition Strategy. It is important to note that this amendment passed unanimously because I think people sometimes can view any discussion around “Energy Transition” in a negative light. If you review that page you will see that although there are certainly environmental reasons that the city created the Energy Transition Strategy http://www.edmonton.ca/city_government/environmental_stewardship/energy-transition.aspx, the first risk mentioned in that package deals with “future high prices and economic disruption…”. So in case you are asking how can a Council that has members across the political spectrum support this unanimously you can get a bit better idea of why different people might have supported it. Ultimately I will always defer to other Councillors to let them tell you why they voted in favour of it but for me, this is both a long-term economic and environmental decision.
Investing a relatively small amount money upfront to start the work on that strategy that can help us save a substantial amount in the long-term is a good decision in my opinion. Page 441 of the “Sustainable Development” section address $1 million to address our Corporate Environmental Targets. The part that is most critical in this package is the first risk mentioned in the package, “Without a climate adaptation strategy, Edmonton may be unprepared to respond to future severe climate/weather related events.” I recognize that some people may still not fully agree with the climate change science - this isn’t necessarily the forum to debate that point - but what is not up for debate is that our city has been experiencing more severe storm events. When our current drainage system was designed, it was to address the “1 in 100 year storm event.” The problem is that in the last decade we have received plenty of those 1 in 100 year storm events. The definition of what consists of a 1 in 100 year storm event has been increased but we now have to work on renewing our drainage system to deal with the current realities.
This program helps us accomplish this critical work.The next largest package is one I did not support. $970,000 was approved for Increased Turf Maintenance. This package can be found on Page 222 of the “Community Services” section. When we received a report in June 2015 about minimizing herbicides from 4% of our greenspace to 1% of our greenspace there was a suggestion it could cost the city more to maintain spaces.
In that same report it was referenced that Toronto was able to eliminate their usage of herbicides with no additional costs and I felt that it would be more appropriate to wait at least a year to see how things go in Edmonton prior to increasing our budget. With that said, the rest of Council felt differently and approved the package. The final package I want to write about is $700,000 for the Election and Census. Page 312 of the “Corporate Services” section has this package.
Completing a census every two years is critical to ensure we are receiving our proper share of grants that come from the other orders of government as many of them are provided on a per capita basis. Considering our growth, not doing a census will end up costing us more than the $700,000 to properly fund the completion of a census every two years.
One final package I wanted to comment on is my amendment to hire two additional staff members to the Office of the City Auditor. This cost $226,000 for 2016 but it fulfills a campaign promise I made when I ran in 2013. Our Office of the City Auditor is consider one of the best in North America and the value we receive from the audits, even when they uncover huge process issues, are critical to ensuring we are providing everyone with the best value for their money. Although there are other packages, that were approved, this makes up the majority of the $10.1 million set aside for Council to reallocate. If you have any questions or comments on the packages above or the ones not discussed, please let me know.
The final number left to discuss is the remaining 1.0%. This number does not account for the full inflationary cost because as referenced above, there were reallocations done to try and cover off some inflationary costs. This 1.0% makes up the balance of the inflationary cost of doing the same things we did in 2015 in the following year.
Anyone who was able to attend my Community Conversation in November heard me talk about trying to find opportunities to drive the percentage down by focusing on staffing. When I submitted my written budget questions which you can find on the right side of the link at the top of the post, I asked about any new staff that was being added. My hope was that we could have frozen hiring and helped to reduce the total ask. If you read Pages 9 and 10 you will see that the only staff being added that were part of the Operating Impacts of Capital or Annualization would have amounted to $965,000 in 2016 or approximately 0.07% of an increase. For reference, annualization refers to cost for a full year of a particular staff member. For example, if we hired someone new on July 1st, they would only be paid half of the full year salary in that year’s budget but for the following year’s budget, the full cost of their salary must be budgeted.
One motion related to staffing that I put forward to be discussed before we finalize everything in April is: “That Administration provide a report on the following before the end of budget deliberations:
1. A breakdown of the 2016-2018 budgeted overtime costs for the following branches:
Facility and Landscape Infrastructure
Fleet Services
Edmonton Transit
Roads Design and Construction
Transportation Operations
2. An explanation of the use of overtime and the possible impacts for each of the branches above if budgeted overtime costs were reduced by two-thirds and taking half of that savings to be used to hire new FTEs. ”This was the only area I felt I needed more information on to be sure we are getting the best value for our personnel costs.In that same Community Conversation we chatted about Project Management as people often said, “I don’t mind paying taxes as long as I feel that it is being used effectively.” With the recent audits that showed poor performance I don’t blame people for asking that question.
As this is becoming an exceptionally long post, instead of providing detail on the changes that have been made, I want to provide you with a link to our performance in 2015 on major projects. This report http://sirepub.edmonton.ca/sirepub/cache/2/f01s3gkhmekjbtrlup3yr3qi/49720712042015125233867.PDF is relatively new so that Council is now kept well-informed about all Capital Projects $20 million or greater. It shows the project's status and any important notes we need to be aware of. If you look at all 92 projects being worked on in 2015, I would suggest the overall performance is close to great but still not excellent. What is important is that is does show that the changes that have been made over the last few years to the process have had a positive impact - remember that although the audits that have come out this year were not good, they were audits on projects started a number of years ago. Many staffing and process changes have since taken place and although we still can improve, things are looking much better.
My final comment on the budget is to repeat that it did pass unanimously. This is important because as mentioned above when discussing another item, our Council has people who are across the political spectrum. Although we aren’t part of a party - thank goodness - we have some people who would fall on the right side of the political spectrum, some on the left and some in the middle. The fact that a group of 12 with a wide spread of political views could agree to support this budget is likely a good sign that although it was not perfect for any single person, it was good enough for everyone to offer their support. I know there was a lot contained within this post and there is actually much more I could write but I hope this helps provide some context behind my decision to support this budget. As usual, if you ever have questions or comments, please contact me. If you are reading this on Facebook, my email is andrew.knack@edmonton.ca and my contact number is (780) 496-8122.
Written by Andrew Knack
