2018 Supplemental Operating Budget Adjustment

Every year I like to write a post on our budget deliberations. 2018 is the last year of our three year operating budget which means many of the decisions made took place in December 2015. When the budget was set a few years back, the original budget had a 4.9% increase in 2018. It was far from ideal but the plan was to hold off on the 1.5% required for the Neighbourhood Renewal Program in 2016 and 2017 to provide some tax relief before fully funding the program again in 2018. Changes to Municipal Sustainability Initiative funding from the Province required that we reintroduce a portion of that funding in 2016 which meant there would be an impact to the 2017 and 2018 budgets. For those interested, you can review my post from last year here. That post provides detail around why I supported the 2.85% tax increase. For the rest of the post I will share my comments on the unanimously approved 2018 budget which will result in a 3.2% increase.

Leading up to the budget deliberations the city staff were working hard to find additional efficiencies that could be applied to the budget. This is a process they go through each and every year to find operating efficiencies. The savings are used to reduce the tax impact and then some of the savings are brought forward to the budget deliberations to put towards any emerging issues identified by Council. For the 2018 budget, over $20 million was identified to help reduce the overall increase. You can review the specific areas where efficiencies were found by reading pages 33-40 of this year’s supplemental operating budget adjustment (Attachment 3 of Item 6.2). It’s important to review those savings because people often ask about what is being done each year to find savings. Since 2014, the detail around those savings can be found in each budget document.

As I am also asked about what I am doing to help find savings, I wanted to provide an update on the motion I made during last year’s budget deliberations. You can review the motion in detail in last year’s post but our Administration decided to use that same approach for 2018 when reviewing staffing needs. I’m happy to say that $3.4 million was found in ongoing savings. Therefore a total of $8.6 million has been saved over two years which has allowed the city to reduce the amount required by taxes.

Some of the emerging items that Council funded out of the ongoing savings include additional funding ($470,000) for the Abundant Communities Initiative. It’s an excellent program which connects more people to the programs, services, and events in their community while also helping to build volunteer capacity. While there are a few smaller items, the main item that Council chose to use the savings on was additional turf maintenance. The $3 million increase was the largest of the emerging items but one that we have heard about for a few years now.

Every year Edmonton increases the supply of park space as developers turn over the municipal reserve land to the city. The increase in land results in an increase in our maintenance costs. While I did not support this budget item, I can appreciate the need to increase the budget for turf maintenance and understand why this item was brought forward and supported by a majority of Council. What I felt I was missing was a clear indication of how this specific increase was going to impact our turf across the city. I’m looking forward to the improved maintenance as this was obviously an issue the last few years. I’m also looking forward to a detailed report back to learn about the impact those additional dollars have our our turf maintenance in 2018.

After the additional items were debated, I chose to support an increase of 3.2%. This increase is made up of the following:

  • 1.4% goes to our final year of Neighbourhood Renewal Program. While the program will be continuing, there won’t need to be a dedicated increase beyond inflation.
  • 0.6% goes to the Valley Line LRT construction.
  • 1.0% goes to Edmonton Police Service for inflation and growth.
  • 0.2% makes up the difference of the savings found against the impact of growth in our city (ex: operations of a new fire hall).

In last year’s post I wrote about how I see us trying to bring the increase around the rate of inflation for 2019. One of those opportunities will come from the Program and Service Level Review. I won’t repeat what I wrote in last year’s post but what is important to note is that this review will help inform the 2019-2022 budget deliberations. My expectation is that the savings found through the external review will create significant savings.

Another major factor will be the upcoming labour agreements. Like most businesses and organizations, staffing is the biggest expense. Negotiations with unions will start in the new year so that an agreement can be in place for 2019. Those agreements will heavily influence the final numbers in the next budget.

The final factor is something I mentioned above, the end of the dedicated funding for the Neighbourhood Renewal Program. Since 2009 we have seen an approximately 1.5% tax increase each year to create and fund this program which is seen by cities across North America as a great way to maintain core infrastructure. Not requiring a 1.5% increase will help with keeping tax increases lower in future years.

As you may have read in my 2017 platform, I have not suggested that taxes will start going down in 2019. During my campaign I was clear that I believe we need to strive to be at or below inflation for 2019 – and hopefully beyond. Our city is growing and we will need to continue building and staffing new fire halls (ex: the communities of Big Lake) and rec centres (ex: Lewis Farms). The increase in tax revenue we receive from new residential communities does not come close to covering the cost of providing programs and services for those communities. What that means for all of us is that we will still need to increase our budget for different items but primarily it will be an increase to staffing as we need people working in those new facilities once the construction is complete.

While I support providing the services for our growing communities, we cannot ignore there has been a cumulative impact over the years that makes it more challenging for those on fixed incomes to stay in their homes. It won’t be an easy discussion next year as we try to balance the needs of a growing city against the desire to keep tax increases to a minimum. If we are diligent and understand that we cannot fund everything during the 2019-2022 budget, we should be able to achieve that balance. As with every budget discussion, there will be an opportunity for anyone to share their feedback at a Public Hearing. In advance of that Public Hearing you will be able to review the results of the Program and Service Level review which can inform your feedback. I’ll also be sure to seek out your feedback in advance of next year’s discussion. Thanks for taking the time to read through this post and please let me know if you have any questions or comments.

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