Fall Capital and Operating Budget Adjustment - Options to Reduce the Tax Increase
Last December 2018 Council approved a 2.6% yearly tax increase in the 2019-2022 Operating, Capital and Utility budgets. These budgets identify costs for renewal and growth of municipal infrastructure, civic programs and services, and sources of revenue including grants, property taxes, user fees and utility rates.
Every Spring and Fall, Council reviews the budget and approves adjustments as necessary based on external factors such as provincial or federal budgets, changes imposed by legislation, impacts related to implementing and completing capital projects, unforeseen changes to economic forecasts that will affect costs, service demand changes or revenue projections, and any council-directed changes to priorities, policies and programs.
In the November 2019 Operating Financial Update, the City of Edmonton identified emerging items that will require future budget adjustments. These include fewer development permits and other drops in fee-based revenues due to the economic slowdown, and a decrease in recreation facilities revenue. The City’s Operating Budget has also been impacted by the provincial government’s 2019 Budget, which was released on October 24. Some of the impacts include:
$14 million reduction in grants given to cover taxes on Government of Alberta properties in Edmonton
Around $7 million lost from traffic fine revenue as Province’s share goes from 26.7 to 40 per cent
$5 million impact from lost revenue and increased expenses for Edmonton Police Services.
The City will consider a number of strategies to address these financial impacts including: service reductions, workforce management through leaving roles vacant, reduction in funding to partners, increasing revenue or cost recovery, and the cost to run and maintain capital projects we’ve built, such as recreation facilities.
The Government of Alberta’s 2019 Budget also had implications for the City’s Capital Budget:
$57.5 million reduction in Municipal Sustainability Initiative (MSI) funding to pay for things like bridges, roads and recreation facilities
$36.6 million reduction in funding meant to replace MSI
$89.3 million reduction in Alberta Community Transit Grant funding to pay for projects like the Terwillegar Expressway or electric buses.
The City is looking at a number of options to address these funding reductions including: using available corporate pool funding only for emerging items related to previously approved capital projects, responsible use of debt-financing, identifying current projects that could be carried forward into the 2023-2026 Capital Budget, and delaying or cancelling currently approved growth projects. In October, Councilor Michael Walters made a motion that Council approved directing Administration to bring back a report listing options to maintain a 2.6% tax rate and options to reduce the tax rate to 0%. You may recall that I put forward a motion during the 2019-2022 budget deliberations, as I felt it was important to strive to keep the tax rate at or below inflation. Upon completion of the budget last year, we were able to create savings of approximately $65 million.
At the December 5th, 2019 City Council hearing, the Options to Further Reduce the 2020 Operating Budget will be presented. I encourage you to read the full report but specifically I’d like your feedback on what items you’d be comfortable implementing in order to achieve a 0% tax increase. Attachment 4 lists 20 potential reductions or savings for Council's consideration to further reduce the cost of services or contributions to the infrastructure budget in order to achieve a 0% tax increase. The list of 20 reductions for Council to consider looks at the following categories: Addressing the Responsibility of Other Orders of Government, Reduction in Funding to Partners, Revenue Generation and Cost Recovery, Operating Impacts of Capital, Service Reductions and Workforce Strategies.
These are some of the items on the list that I’d be open to cutting from our budget:
Addressing the Responsibility of Other Orders of Government: Items 1 & 2 both look at reducing or ceasing services that are provided by other orders of government and both were recommended for a reduction in service in the Program and Service Review.
Savings of $980,000Service Reductions: Items 13, 15, 16, and 17 all propose service reductions which normally I would be cautious with, however 15 and 16 were identified in the Program and Service Review and recommended a reduction of this service anyhow. Item 13 relates to scaling back on turf maintenance services across the city which I feel is an appropriate measure with little impact to Edmontonians. Item 17 I felt quite comfortable with as this relates to Council Event Spending on Alberta Urban Municipalities Association (AUMA) and Federation of Canadian Municipalities (FCM) events.
Savings of $2,270,000Operating Impacts of Capital: Item 7 relates to Back Alley Renewal. While I do not want to see cuts to this critical infrastructure investment, the option to defer some of the work in order to realize a savings of $6,760,000 is appealing especially knowing that we’ll continue upgrading the alley’s just at a slower pace than previously expected. These are some of the items on the list that I’m not open to cutting from our budget:
Service Reductions: Despite a 2020 net savings of $2,088,000, Items 9 & 10 propose reductions to critical services Fire Rescue offers that I feel could negatively impact the vital work they do to keep Edmontonians safe. The savings potential does not seem justified if we have to ask them to obtain services from further away. Item 8 proposes closing 4 Community and Recreation facilities based on utilization rates, operating costs, and cost recovery rates. Ward 1 residents have been very clear about their desire for a recreation facility. Knowing that building the Lewis Farms Recreation Facility will likely be delayed, closing 4 others seems like a bad idea at a time when most facilities are over capacity. What do you think? Which strategies do you feel are the most appropriate and responsible way to reduce costs? While we all would like to see a 0% increase, are there some areas you might be willing to pay for in order to maintain services? https://youtu.be/LdwYAhPHptY
