Facing a looming $74-million deficit by the close of 2023, Edmonton city council grapples with financial realities that may lead to impending tax hikes. Technically, the city’s reserve fund could afford temporary relief, but city staff advice leans towards tapping into the reserves to offset unexpected expenses. This move, however, could result in the fund balance plummeting from its present $136 million to a risky $62 million, drastically below the stipulated account minimum of $124 million. A restoration plan for the reserve slated within the next three years is crucial.
In a previous allocation plan last December, Edmonton’s city council earmarked funds for essential services like transit, recreational centers, and maintenance operations. This action peddled annual tax increases of five-percent for residents, effective till 2026. But given the current fiscal trajectory as of June, spending is projected to escalate.
Addressing the fiscal concerns, Mayor Amarjeet Sohi acknowledged that while balancing the annual books remains a priority, the city is also grappling with issues beyond its control. A significant portion of the $74 million overrun can be attributed to:
- $43 million steered towards salary settlements from recent union negotiations, including the police
- $12 million in transit revenue deficits due to higher rider patronage for discounted fares
- $8 million bite from gas franchise fees resulting from Atco’s operational cost reductions for distributing natural gas
- An $6 million unexpected dent in construction permit fees.
Mayor Sohi highlights that the looming deficit largely stems from external pressures that the city must confront.
Similar economic challenges resonate across many Canadian and North American municipalities, with some opting for tax hikes as high as 10 percent – a stark contrast to Edmonton’s 4.97 percent. Mayor Sohi identifies the predicament as suggestive of the limitations municipalities encounter while endeavoring to boost revenue. Local government units like Edmonton can only augment income via property taxes, user fees, franchise fees, or Epcor dividend.
City council members opine that Edmonton’s budget gaps present opportunities for provincial support, citing increases in police budget as an instance. They emphasize that the drivers of crime, namely provincial underfunding and cutbacks, are often factors beyond their control. Projections indicate that it’s high time for a “fair deal” for Edmonton and other Albertan cities, as external pressures continued to impact the budget.
Councilor Tim Cartmell raised stark opposition to increasing property taxes, citing the exhausted capacity of Edmonton citizens to handle surges. He draws parallels between the city’s situation and that of its residents—the city, too, is grappling with rising expenses, much like the residents. According to Cartmell, these inevitable costs, alongside the budget pressures, are conspiring for a substantial budget increase.
