June 26, 2018 3:56 pm
Updated: June 26, 2018 8:28 pm

Edmonton’s 4-year budget described as ‘tight’ as council begins deliberations

WATCH ABOVE: Later this year, debate will get underway on the City of Edmonton's next budget cycle. As Vinesh Pratap reports, Mayor Iveson is now throwing out a number for how high he'd like to see a potential increase.

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Edmonton city council started looking at the upcoming four-year budget on Tuesday and councillors are already facing some challenges.

READ MORE: 2018 Edmonton tax increase set at 3.5%

Costs are going up as new union contracts will be negotiated this year, while grants from the province are going down as Municipal Sustainability Initiative (MSI) money for construction runs out and is replaced.

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Higher electricity and fuel costs are also expected to hurt the city’s bottom line.

READ MORE: Edmonton city council has no appetite to reverse added borrowing recommendation

“You’d have to admit we are in challenging times with our budget, let’s just be frank about it,” Councillor Mike Nickel said to city manager Linda Cochrane on Tuesday.

“I would agree it’s tight,” Cochrane replied.

This budget plan will span 2019 to 2022. The city will start budget deliberations with a two per cent base tax increase per year to cover police expenses, alley renewal and LRT expansion. These other factors could see the tax increase go up.

READ MORE: Edmonton back alley repair could lead to 1.27% tax increase

“I think in terms of wages, we know that personnel is the largest portion of our budget and all of the contracts are up for renewal at the end of the year,” Stacey Padbury, from the city’s finance office, said.

The forecast the city was given suggests labour costs will be significant. Padbury says it will all depend on how contract talks go with the unions.

“That’s just something that we’re trying to factor in and manage.”

The mayor would really like to stay at two per cent, but a lot rides on the revenue-sharing conversation with the province.

“With neighbourhood renewal fully funded, with a more restrained labour cost inflation environment in the next few years, I think that it’s still possible for us to at least handle the basics with tax increases that match economic growth — so, in that two per cent range if the economy is growing by about two per cent,” Don Iveson said.

“Gone, I think, are the days of taxes increases well above inflation.”

“The outlook is, one way or another, a more modest tax increase. How much we’ll actually be able to build and meet the needs of Edmontonians for things like rec centres and certain roadway upgrades will depend, to some extent, on the settlement we get from the province to take the place of the old Municipal Sustainability Initiative grant program,” Iveson said.

READ MORE: Alberta government unveils new $1.2B affordable housing strategy

Another decision by the Notley government will impact Edmonton budget decisions. Social housing won’t have to pay property taxes but grants from the province won’t cover the shortfall in revenue to the city.

Councillor Scott McKeen asked city administration about this drop in property tax revenue.

“The province made a decision to remove property tax burden from social housing in municipalities,” he said. “They’re filling that gap with funding though, are they?”

“They are not,” city administration replied.

“We haven’t heard anything about a proposal?” McKeen asked. “So they waved their magic want, did a good the social service sector, but did not make us whole.”

Business owners are also voicing concerns.

A group called Prosperity Edmonton wants city council to hold the line on business tax increases out of concern for the viability of local businesses.

Watch below: Complaints have been raised by those in Edmonton’s business community over a hike in property taxes. Vinesh Pratap reports.

Chad Griffiths with Prosperity Edmonton points out that from 2006 to 2016, inflation and population growth in Edmonton jumped 50.5 per cent, while City of Edmonton spending during that time frame went up 100 per cent.

“This affects everybody,” Griffiths said. “Businesses across the board — not just property owners — but companies, small and large, are all represented by the different associations in this group.

“It’s not just property owners who are feeling the brunt of this; it’s businesses and people all over Edmonton.”

Prosperity Edmonton would like the city to consider holding off on business tax increases so they can try to catch up.

READ MORE: Edmonton business owner raises concerns with property tax increases

Budget talks start in earnest this fall. The budget will officially be released on Nov. 1. Once the documents are released to public, they’ll have the chance to weigh in and a full debate will take place.

© 2018 Global News, a division of Corus Entertainment Inc.

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