What does affordability crisis, Edmonton tax hike mean for residents?

Click to play video: 'Concerns with Edmonton’s proposed property tax increase'
Concerns with Edmonton’s proposed property tax increase
As Edmonton city council deliberates the 2024 budget, Mayor Amarjeet Sohi warns Edmontonians should expect a tax hike that's higher than the 5 per cent originally anticipated. As Sarah Komadina explains, it's a similar situation in many municipalities but there are concerns raisings taxes too much will push people out of the city – Nov 23, 2023

Edmonton city councillors are looking at a seven per cent property tax hike — 2.13 percentage points above the 4.95 per cent increase approved last December — as municipalities struggle with the same affordability challenges being faced by people across Canada.

“Talking to other mayors and councils across the province, that is going to be pretty standard,” said Tyler Gandam, president of the Alberta Municipalities association and mayor of Wetaskiwin.

“I know Calgary passed their budget — or are really close to passing theirs — and are looking at a five to seven per cent increase. And many of the other municipalities are seeing something similar or talking about something similar as we get into budget deliberations here.”

Gandam says municipalities are in a tough spot. They’re trying to work on capital projects and maintain services, while also not increasing taxes too much.

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“Just the cost of doing the business that we have been doing — no changes to the levels of service — we are going to see an increase.

“So we have to wrestle with: are we going to cut levels of service or an increase to the tax base to make up for it?”

He says the cost of infrastructure, supplies and labour is high and the provincial and federal governments aren’t chipping in enough.

“We’ve got a $30-billion infrastructure deficit across the province. So while we try to tackle some of that the best that we can, it comes at a cost.

“That is a big part of why municipalities have to decide on the levels of service that they’re going to deliver to their residents or how much capital projects they can do in a year based on the funding that they receive through property taxes and through grants either through the provincial government or the federal government.”

Click to play video: 'Edmonton city council begins 2024 budget deliberations as large tax hike looms over decisions'
Edmonton city council begins 2024 budget deliberations as large tax hike looms over decisions

Then, Gandam says, municipal governments are tasked with choosing areas where they can cut funding. That’s usually areas like arts and culture, he says.

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“We’re facing a much higher rate of mental health and addictions right now and so that has an impact on emergency services.

“Municipalities are paying for fire service and they’re paying for police service so when you don’t have the funds or you’re not keeping up with inflation, you tend to see those types of services deteriorate, possibly, if that’s where they’re going to cut their levels of service.”

Budget deliberations continued at Edmonton City Hall Wednesday, after city administrators recommended a 7.09 per cent tax increase for 2024.

The property tax hike was proposed in response to increased costs and reduced revenues and administrators have said it will cost an additional $41.2 million to maintain services in 2024.

“I don’t think it’s realistic to expect that we will be able to maintain a 4.97 per cent tax levy,” Mayor Amarjeet Sohi said Wednesday afternoon. “It has to be somewhere between that amount that was set last year to what administration has proposed.”

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Among the rising costs cited by administrators are higher utility prices — particularly electricity — and higher-than-forecast arbitrated salary settlement for Edmonton police officers.

“We know that many Edmontonians are also stretched thin,” said Stacey Padbury, Edmonton’s chief financial officer and deputy city manager.

“We are only recommending budget adjustments that are necessary to maintain our services and deliver critical capital projects.”

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Click to play video: 'Concerns with City of Edmonton’s proposed property tax increase'
Concerns with City of Edmonton’s proposed property tax increase

But the Alberta director for the Canadian Taxpayers Federation says the city needs to take a good, hard look at its spending.

“It looks like Edmonton City Hall has a spending problem,” Kris Sims said.

She says, when looking at a six-year snapshot between 2011 and 2017 — and avoiding the pandemic years — the population went up by about 14 per cent in those two timeframes, according to Statistics Canada. Sims says over that time, City of Edmonton spending went up by about 44 per cent.

“If you just take a look at the executive summaries of their budgets and just look at expenditures ($1.8 billion in 2011 and $2.7 billion in 2017) and do the math year to year, population to population … why then did their spending still go up by that much?”

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Sims is urging city council to question administration’s recommendations and go through the budget line by line.

“Ask themselves if every single expenditure is a want or a necessity. Can this wait until later? Can we spare … Edmonton property taxpayers this expense?”

She also wants councillors to really consider value for money.

“It is your job to ask these hard questions to staff…. How much has our communications department expanded? How much are we spending on marketing? … Why did we decide to spend $60 million on electric buses when we didn’t know if they would work up here in Edmonton?”

Click to play video: 'City of Edmonton’s electric bus fleet plagued with issues'
City of Edmonton’s electric bus fleet plagued with issues

“Sometimes when people work within government they become part of a bubble and they forget the harsh realities of people who don’t work for the government. And right now the harsh reality is a lot of people can’t afford the basics and lots of property owners will not be able to afford this tax hike.”

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Edmontonians should make their opinions heard too, Sims said.

“Right now is the time. Pick up the phone. Call your councillor. Call your mayor. Tell them that you don’t want a seven per cent tax increase.”

The recommended tax increase would mean Edmonton households would pay about $750 for every $100,000 of their assessed home value in 2024 — that’s $49 more than in 2023.

That means for a typical single-family, detached home assessed at $400,000, the property taxes would be about $3,000.

Click to play video: 'Edmonton businesses concerned over recommended tax increase'
Edmonton businesses concerned over recommended tax increase

A local housing developer says he’s seeing more and more people buy homes outside city limits to avoid the higher costs.

“It’s frustrating when you see the city cannot even plan for one year,” Varinder Bhullar said. “Property taxes are not a little thing.

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“Where I am standing right now the property taxes is 20 per cent less than in Edmonton. That means it’s almost $1,000 less than Edmonton,” he said at Irwin Creek development in Leduc County.

“People from Edmonton are coming here because they can afford here and they cannot afford Edmonton.

“It’s sad. I’m all for affordability but I think when you’re putting more burden on people, that takes affordability away. It’s counterproductive, actually. When you’re increasing someone’s taxes, they cannot afford a home, so they become working homeless.

“Edmonton needs to become more efficient. If they don’t, they will lose more tax base.”

Click to play video: 'Edmonton mayor wants more money directed to snow and ice clearing'
Edmonton mayor wants more money directed to snow and ice clearing

During budget deliberations Wednesday, Sohi acknowledged the difficult choices facing city council as it tries to balance competing needs.

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“It’s tempting to have zero per cent increases, tempting to keep property taxes as low as people have tried to do in the past, but we also need to be very realistic,” he said. “There’s a cost to run the city. There’s a cost to providing those services, and if we don’t invest in public services, then low-income Edmontonians, middle-income Edmontonians, their cost of living goes up.”

The mayor said this council is facing the consequences of past councils’ “irresponsible decisions.” He said the budget process has been “difficult and frustrating.”

“The decisions made in the past of zero tax increases have resulted in underfunding of the snow and ice program, underfunding of bus service, underfunding of turf maintenance,” Sohi said.

“Now we need to catch up and there are other pressures around inflation, other pressures around the drop in the transit revenue, pressures around salary settlements and additional cost for public safety and wellness and, at the same time, pressures on people’s affordability.

“We need to make decisions today that are not hurting the ability of future councils to be able to continue to provide quality public services that Edmontonians rely on.

“We need to make up for the irresponsible decisions of the past and make sure we invest in services. People want more bus service. People want more improved snow and ice service. People want more turf maintenance to make our city look more tidy.”

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Council will continue budget deliberations on Monday. A finalized budget is expected by the end of November.

Property owners will learn about their 2024 assessment in January and will receive their 2024 tax notice in May.

Click to play video: 'Calgary city council passes budget increases to address safety, housing, infrastructure'
Calgary city council passes budget increases to address safety, housing, infrastructure

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