Introduction to the Fiscal Gap
On October 9th, our Executive Committee reviewed a detailed report from the City of Edmonton's Administration on our fiscal gap—essentially, the difference between what we earn and what we need to spend. This report is one of the most comprehensive I've seen during my time on council, covering key financial challenges the city faces.
The report looks at factors causing Edmonton's shortfalls in both day-to-day operations and long-term projects. It has sections on topics like infrastructure funding issues, revenue challenges, debt pressures, and more.
Edmonton is financially stable, with solid policies and transparent budgeting. However, like many other large Canadian cities, we face growing fiscal challenges due to limited ways to raise revenue and rapid population growth, which increase demand for services. This gap between our revenues and spending needs could lead to:
Reduced service levels,
Worn-out infrastructure,
Difficulty meeting city goals, and
Higher tax increases.
Our fiscal gap isn’t just a "spending" or "revenue" problem; it’s a mix of many factors, many of which are beyond the City’s control. Some key issues include:
Revenue limitations: Municipalities mostly rely on property taxes and fees, but these haven’t grown as fast as costs. Funding from other orders of government has also declined, increasing the burden on local taxpayers.
Population growth: Edmonton has been Canada’s fastest-growing large city, putting pressure on budgets across ALL services.
Infrastructure costs: As the cost of infrastructure rises, the City relies heavily on funding from other governments, which has decreased.
Non-residential tax base: Edmonton’s share of business tax revenue is shrinking, while surrounding areas have absorbed more growth.
Social services burden: Edmonton, as a regional hub, has a higher concentration of public health and social issues, and the COVID-19 pandemic has increased the City’s support role.
Service Expectations: Growing demands for services and infrastructure add to expenses, especially as the city plans for a population of 2 million as outlined in our City Plan.
The City also faces pressure from provincial and federal governments to meet specific conditions for grants, which often requires significant local investments.
Despite these pressures, Edmonton’s strong fiscal position is crucial for delivering quality services, attracting growth, and creating a competitive city. But to keep this position, we’ll need to make tough choices about service levels, revenue, and future goals.
The report concludes with a call for the City to use all available tools to close the fiscal gap and to make thoughtful, coordinated efforts. This approach will strengthen the City’s position and help when seeking support from higher levels of government.
Large cities like Edmonton provide the ideal setting for economic development. To compete globally, cities need to make the right investments in the right places in a timely manner.
There are many reasons that people choose to live in Edmonton, for all of those reasons, we need to ensure that Edmonton not only continues being an attractive place to live but to improve services where we can.
This includes:
Well-designed infrastructure and public spaces
Great transportation systems
Good access to markets
Strong talent pools
Excellent services and cultural amenities
The fiscal gaps we are facing as a city are similar to what many households are experiencing. There might be different factors households are facing compared to the city, but the impact is similar. Working through this won’t be easy but with this fiscal gap report, we have an excellent foundation to tackle a major challenge.
Fiscal Gap Report: https://pub-edmonton.escribemeetings.com/filestream.ashx?DocumentId=236515
Budget Blog Part 1: https://andrewknack.ca/blog/budget2025part1
Budget Survey: https://forms.gle/VMo8rVyRwbWEv3GLA
