Edmonton residents could be facing an even greater tax increase than council originally proposed thanks to changes to some tax rules on education property tax and unexpected cuts in the provincial budget.
A previous promise to increase Municipal Sustainability Initiative funding by $50 million was broken. So, cities are getting less MSI funding than they were expecting for this and next fiscal years.
“I’m disappointed to see, like everybody else, we’re on the roller-coaster too when it comes to infrastructure funding,” Edmonton Mayor Don Iveson said last week.
“I know many municipalities were counting on that money this year.”
The city had planned to use MSI funding for neighbourhood renewal. However, since that money won’t be coming in, council discussed Tuesday reinstating a small neighbourhood renewal levy.
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Council had initially hoped to keep its tax increase at 2.8 per cent. Now, council may have to implement a 3.4 per cent increase.
Iveson described the grant roller-coaster ride as “vexatious.”
“Our unrestricted infrastructure fund, which we could use for things like neighbourhood renewal, went up last year by $10 million a year for two years and then it came back down this year before we ever even got the money,” the mayor explained.
“We were counting on that money for neighbourhood renewal this year. Now we can’t. That’s one of the things behind our small adjustment in our tax increase from 2.8 back up to 3.4.”
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The province also decided to stop charging education taxes to provincially-owned buildings within city limits, like universities, which will lead cities to try to make up the difference.
Overall, Edmonton residents are looking at an 8.7 per cent increase in education taxes.
“Every year where the education property tax goes up by more than the city tax it’s extremely irritating for every mayor and councillor in this province to have to explain to citizens that their property taxes are going up because of a decision of another order of government,” Iveson told 630 CHED after the new numbers were delivered to city council Tuesday. “It’s really difficult for people to understand and people end up being furious at us.”
“We have marching orders from the province to put that on our property tax bill,” Iveson said. “The issue is citizens don’t necessarily distinguish. So, city council has said we’re going to do a 3.4 per cent tax increase for business and residents to cover operating the city, building the LRT and we’ve restored some additional funding to neighbourhood renewal.”
“I’m working hard to make sure that everybody understands the fluctuation in this is coming from the province, not coming from the City of Edmonton.”
He did point out the one piece of good news is the rate goes down for businesses who pay non-residential taxes. Council agreed to flow through those savings.
When asked about the increase in education taxes, Premier Rachel Notley said the government was following a funding formula previously set by the Progressive Conservatives.
“This government very clearly committed to ensuring that education funding follows enrolment and increases on a predictable basis of two per cent each year,” she said. “We understand we need to invest in our education system, not starve it… Three years ago, the previous government established a formula; we didn’t change it, we didn’t tell anybody we would. This shouldn’t be a surprise for anybody.”
With files from Scott Johnston, 630 CHED
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