Zero Based Budgeting
What is Zero Based Budgeting?
Zero-based budgeting (ZBB) is a budgeting method that requires all expenses to be justified and approved in a budget period. At the end of the budget deliberations in December, I made the following subsequent motion:
“That Administration initiate a zero-based (line-by-line) budget process for the development of the 2027-2030 Budget, including:
establishment of a temporary Council Budget and Finance Committee, including the Mayor as a member of the Committee, that supports and advises Council by providing recommendations to fulfill its oversight responsibilities for financial reporting, critical financial policies, and asset management and whose primary responsibilities include:
overseeing the preparation of multi-year operating and capital budget processes
reviewing budget documents before they are presented to Council
examining periodic financial and budget reports as required
facilitating branch by branch presentations on the proposed budget to the Committee, including all Agencies, Boards, and Commissions, starting in early 2026, which include:
Benchmark comparisons with other municipalities for costs and performance levels while considering total size of inventory (ex: laneway kms or roads, hectares of green space, number of civic buildings, etc.).
Any available audit information and/or progress for each branch.”
This motion was created in collaboration with Councillor Cartmell and Mayor Sohi as a way to start a full refresh of our budget. It was great to see that this motion was approved by Council.
Before I continue with why I think this motion is critical for the future financial sustainability of our city budget, please take some time to review my 2024 budget blogs:
1. Introduction to the Fall Supplemental Budget:
https://andrewknack.ca/blog/budget2025part1
2. Introduction to the Fiscal Gap:
https://andrewknack.ca/blog/budget2025part2
3. Limitations of Property Tax:
https://andrewknack.ca/blog/budget2025part3
4. Infrastructure Funding Challenges:
https://andrewknack.ca/blog/budget2025part4
5. Non-Tax Revenue Challenges:
https://andrewknack.ca/blog/budget2025part5
6. Tax Base Challenges:
https://andrewknack.ca/blog/budget2025part6
7. Expenditure Pressures:
https://andrewknack.ca/blog/budget2025part7
8. Debt Servicing Pressures:
https://andrewknack.ca/blog/bugdet2025part8
9. Why I Support the Budget
Finally, here’s a chart I created with how Edmonton’s property tax changes compare to other municipalities in Alberta.
Even though this chart shows that the property tax changes in Edmonton are comparable to many other municipalities across Alberta, as I noted in the video in Part 9, people are feeling the financial pressure every day. They are seeing prices increase for groceries, insurance, utilities, clothes, and just about every part of their daily lives. That’s why our budget process needs a reset.
In the 12 different budgets I have been a part of, we have seen many cost reductions. In particular, we saw some significant reductions during the pandemic which is why we had the lowest property tax increases in 25 years from 2019-2022 (and the first property tax decrease in an even longer period). Looking for efficiencies is an everyday exercise for our City Administration.
With that said, I believe we have reached a point where looking for efficiencies within our existing operating budget isn’t going to produce the impact people seek. Considering the rapid population growth we are experiencing, the reduction in open-ended provincial infrastructure funding, and the frequent downloading that is impacting our operating budget (ex: issues related to housing and homelessness), we need to take a different approach than we have before.
That’s what brings us to Zero Based Budgeting. As noted at the top, this is a complete refresh of the budgeting process where every branch starts at $0 and every expense must be justified to be added into the budget. It’s a lengthy exercise and that is why the motion specifically states that we will spend the next year building it so that by early 2026, the next Council will be ready to receive line by line presentations from every branch. While it’s a time consuming process, it’s critical to determining what services or programs the city should be providing at a time of rapid growth.
One thing to be very clear about is that this isn’t designed as a cost savings exercise, it’s a prioritization and efficiency exercise. What I mean by this is the first step in this process is understanding and properly prioritizing the various services and programs we provide. For any services or programs that are not seen as high as a priority, we can reallocate those funds to the higher priority services. I’ll continue to use snow removal as the example that I think needs a larger budget and so this exercise could allow us to shift funding from one area to areas like snow removal.
Edmonton Public Library went through a ZBB process back in 2012 and from 2013-2023, they did not require an operating budget increase even with the rapid growth our city has been experiencing. Although I’m not sure we will see the exact same results throughout the rest of the organization, this is a great opportunity to help create a new foundation with all Edmontonians.
As mentioned above, this process will start in 2025 but a lot of the heavy lifting begins in early 2026 with the new Council. As candidates start coming to your doors and events to engage with you, make sure to ask them about what are some of their biggest priorities and where they might see making changes. And don’t let them be general, dig in and ask for specifics. If you need a good place to start, Part 1 of the budget blog series (link above) will help you better understand how our budget works and where the vast majority of our operating dollars go.
I am excited for this work to start and will be sure to provide you with updates on how it is going and how you can provide feedback in the future.
