2019 Budget Primer

This fall, City Council will be discussing and voting on the 2019-2022 Capital and Operating budgets. Leading up to the vote, the City of Edmonton is engaging in thorough public consultation, including this survey on budget priorities which I encourage all Edmontonians to fill out. I will also be doing extensive consultation to determine what our community’s priorities are for the next four years, this includes several surveys, social media engagements, and in person meetings to gather feedback. As the City budget is quite extensive, I want to make sure that people have an accessible venue to ask their questions. By filling out this form, you can submit your budget related questions to me. This way, I can create a Frequently Asked Questions sheet answering all your questions. Afterwards, I would like to get your feedback on the capital projects the City is considering as well as operational expenses. Technically the operating budget and capital budget are two separate documents. For the sake of simplicity, they will be called “the budget” or “the four year budget” in this post.

 

 

First, I want to cover some of the fundamental aspects of the budget. These include the difference between capital and operating budgets, why the budget matters, what is being decided, how debt financing works, and the impact on taxes. The following sections will outline these important aspects of the budget.

 

Why the Budget Matters

Deciding what to fund in each budget shows Edmontonians and the rest of the world what we value as a City. This upcoming budget must ensure Edmonton continues to grow into a major Canadian city and the choices City Council makes on this financial plan will be critical to that success.

 

The Difference Between the Capital and Operating Budget

This section is taken directly from the City of Edmonton website, as they have done an excellent job explaining the difference between the capital and operating budget.

“The Operating Budget pays for the everyday workings of and interactions with the City. Whenever you talk to a City employee on the phone, pull over for firefighters rushing to an emergency, see a Council meeting on the news, renew your pet licence or read a City publication—this is the Operating Budget in action. The City of Edmonton’s Operating Budget projects the revenues and guides the spending for our civic services and programs. These are essential to the operations of our city and include police, fire rescue, snow clearing, pothole repair, libraries, park maintenance and recreation centres, as well as many others. The Operations Budget ensures that we have lifeguards, accountants, librarians, detectives, engineers, city planners, bylaw officers, receptionists and a host of other employees to make the City work for you. The City of Edmonton does not budget for a deficit or plan for surpluses. The taxes we collect are required to provide the essential amenities and level of service that Edmontonians expect from our prosperous, growing city.

The Capital Budget pays for everything we build, refurbish and renew. When we build new recreation centres, replace bus engines to extend their life, lay down new LRT tracks or repave the road in your neighbourhood, that’s the Capital Budget. Past Capital Budgets have addressed key growth and renewal priorities. And as we progress into a new Capital Budget, we are doing so on the heels of unprecedented investment in key infrastructure and improvements like public transit, neighbourhood revitalization, libraries, fire and police protection, new parks and recreation buildings, and bridge construction — all benefiting Edmontonians and meeting the needs of our transforming city. In order to maintain Edmonton’s momentum, we must carefully focus on what we need to invest in most while we build the infrastructure we’ve already approved and committed to, such as the Valley Line LRT. As new capital projects continue to be built, the budget must also grow.”

Examples of items that will be voted on in the 2019-2022 operating budget include public transportation, neighborhoods and parks, road maintenance, waste services, etc. Examples of items in the capital budget would be back alley renewal, the Lewis Farms Recreation Centre, widening roads, industrial area upgrading, etc.

 

 

I also wanted to explain how the Edmonton Police Service budget fits into this model. The police have a slightly different budget process, because their budget is decided by a formula which leads to annual increases. This gives the police more certainty in planning their operations.

 

What the Budget Decides

The City of Edmonton has chosen to use multi-year budgeting in order to make longer-term financial decisions which will allow us to better plan for the future. That being said, there are opportunities each year for Council to reallocate funding priorities based on public feedback. The budget will decide which infrastructure projects will receive funding in the upcoming four years as well as what other investments into our community the City of Edmonton will make. This could include anything from road widening projects, City of Edmonton services and programs, city governance, public transportation, and more.

 

 

Budget Timeline

The City of Edmonton has a 10 year strategic goal which is outlined in “The Way we Finance”. This ensures the City stays financially sustainable during our next phase of growth. In regards to the consultation and voting process for the 2019-2022 Capital and Operating Budgets, both the City of Edmonton and myself will be soliciting feedback. Please note that all the following dates could change. Please stay tuned to www.AndrewKnack.com for finalized dates. The City of Edmonton is also doing extensive consultation on the budget, including a survey which can be found here.

 

Early September: I will be asking constituents what questions they have about the budget.
September – October: I will be having sit down meetings with constituents and community leaders.
October – November: I will be soliciting feedback on the budget.
Mid November: City Council will receive budget.
Late November: City Council will deliberate budget.
Mid December: City Council will vote on budget

 

 

Debt Financing

Debt financing is a tool the City of Edmonton uses in order to build, improve, or repair essential infrastructure projects. Using debt financing means that the City can pay for major infrastructure projects over multiple years, instead of having to pay the total cost before starting a project. This helps ensure that taxpayers are contributing equally for an infrastructure project that will be used over a significant period of time. Although debt financing is a helpful tool, the City stays well under the debt-financing limit established by the provincial government, as well as our Debt Management Fiscal Policy. This ensures that the City only takes on a reasonable amount of debt in its mission to stay financially sustainable. Projects which may be funded through debt financing in the upcoming budget include the Lewis Farms Recreation Centre, Valley Line LRT, road widening, industrial area upgrading, park renovations, etc. For more information on debt financing, you can also read the Debt White Paper.

 

Image: Mock Up of Proposed Lewis Farms Recreation Centre

 

Impact on Taxes

Property taxes are the primary source of funding for the municipal government. Edmonton City Council strives to ensure living in Edmonton is affordable and works to find the balance between tax increases and providing necessary services. In my last term, I put forward a motion that helped us achieve our lowest tax increase in a decade. During the municipal election last year, I suggested that I would like to see us strive for an increase in 2019 no higher than inflation.

 

 

Conclusion and Next Steps

It’s very important that we do everything possible to ensure our tax dollars are being spent wisely. My goal with the upcoming budget is that it will continue to fund needed operations, such as emergency services, recreation, road maintenance, etc. while continuing to invest in infrastructure projects that will help our community thrive. If you have questions about the budget I encourage you to fill out this form, so that I can answer any outstanding inquiries you might have. It is of utmost importance to me that Edmontonians understand what the City of Edmonton is investing in over the next four years.

I urge every Edmontonian to reach out to myself or your City Councillor to share your feedback on the upcoming budget. The City of Edmonton website has extensive information on the process regarding the budget, and you can stay tuned to www.AndrewKnack.com to hear more about Ward 1 specific items. Whether your priority is new recreation centres, libraries, roads, or simply keeping property taxes low – I want to hear what you think.

 

Written by A. Knack and M. Banister.

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