Managing Inflation, Growth and Expectations

The 2008 Budget process is currently underway. The proposed $1.49 billion operating budget will help us maintain current services important to all of our residents and businesses.

But there is no question, our budget also shows signs of strain. Overall increases of $70 million this year translate into a 10.9 per cent property tax increase.

This increase is not final and I do believe there will be ways we can see some improvement. I will be discussing several ideas with my Council colleagues to find a more manageable budget overall, before a final rate is set in December.

But notwithstanding any incremental increases or decreases, I also think it’s important that our citizens have a full and fair understanding of what it is we are working with on this budget – starting with the financial issues that many cities find themselves in.

The budget does focus largely on property tax, but residential property taxes only make up 15 per cent of the City’s total revenue. Another 15% comes from business tax, including business property tax, but the balance comes from a range of user fees (which means that people pay directly for service they use), from provincial grants, our EPCOR dividend, the ED TEL fund and a few additional sources.

These other sources of income pay for a substantial part of the costs of running this city, but they are fixed and don’t increase with inflation. So when the City needs to absorb additional costs all of these costs have to be covered by our taxpayers – both households and businesses.

Inflation and growth are the main reasons the City’s operating budget is so challenging. In this sense, the city is not unique. We have the same pressures as any household or business that is trying to keep pace in this really hot economy.

We do have unique challenges however. Such is the nature of our region. Our 750,000 citizens build and maintain services, and infrastructure, for over 1 million people. Yet only 750,000 people pay taxes here.

Policing for example, costs the same in Edmonton as it does in Calgary – even though we have 250,000 fewer people. We need the same size system, because 1 million people put pressure on this city, but we don’t have the same base that shares in the cost.

You pay through your taxes to maintain major facilities and services like Commonwealth Stadium, the Winspear, and the LRT, but the customer base of these assets is much larger than the base that pays.

We are further challenged by the fact that Cities receive less of the total tax dollar than our provincial or federal partners. Only about 5 cents of every tax dollar you pay actually flows to the city. So when you see the Province and Ottawa able to announce record surpluses – and even tax cuts – remember where the bulk of your tax dollars go.

All of these issues are important, but Edmonton also has to be responsible for ensuring that it does the best possible job with the money we do get. And that means being open and accountable with our citizens.

Over the next several weeks, our budget will be debated in the open and in a public forum where anyone is welcome to come and listen.

I encourage you to share your ideas about the city’s proposed operating budget with your ward councillor.

Your opinions matter to all of Council as we search for a workable solution for our citizens that ensures we can keep pace on the services Edmonton needs, but maintain a balance on what our ratepayers can afford.

Final decisions about the operating budget and property taxes will be made in mid-December.

For more information about the proposed budget visit www.edmonton.ca