Edmonton city council will be asked on Tuesday to approve dipping into a reserve fund to balance the books. That’s based on the mid-year financial update that shows the roughly $2 billion budget is $10 million in the red on day-to-day operations.
In a report released Thursday, tax-supported operations told two stories. While some parts of the budget are in good shape because the city hasn’t spent as much on things like snow clearing as they thought they would, other expenses like fuel prices, and increased personnel have cost the city more than anticipated.
Revenue has taken a hit as well, because the city is not collecting as much in grants in lieu of taxes revenue from the province.
“There are still certain cost pressures that are completely out of our control,” Mayor Don Iveson told Global News on Friday. “Energy costs have gone up and that’s affected the financial projections for this year.”
Administration is asking council to approve taking $9.7 million out of the Ed Tel Fund to help balance the books.
“We happen to have a favorable performance from the Ed Tel Fund which allows us to offset it for this one year,” the mayor said. “But we can’t guarantee that for next year, so it’s one of those ongoing budget pressures if energy prices stay stronger.”
Iveson said work continues on the task of finding cost savings. The target is two per cent a year, which is roughly $15 million. While the list of successes will be compiled closer to when city council sets the next budget, Iveson was able to point to one example. It’s a warehouse in the west-central part of the city that the corporation chopped from its inventory.
It has been turned over to police to be used for materials management, which will include office furniture and other equipment. A city spokesman said specific cost savings are being compiled by the Edmonton Police Service, but they’re estimated to be in the tens of thousands of dollars a year.
“That’s a significant savings to the corporation,” Iveson said. “That warehouse has been repurposed for another use that police had so we didn’t have to go get a new warehouse to serve them. So we’ve closed something down that wasn’t giving us good value for money.”
The council report justifies dipping into the Ed Tel Fund because it’s value on June 30 was at $838.1 million, 17.6 per cent above the inflation adjusted principal, and therefore the fund is in a position to pay a special dividend in 2019 in the amount of $9.7 million.
Administration is recommending council take the money early.