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An Edmonton City Council clash is coming on debt as other money dries up

Edmonton City Council told money will be tight going forward
WATCH ABOVE: Could major city projects be on the chopping block? A grim picture was painted for Edmonton city councillors on Tuesday. Kendra Slugoski explains.

It appears the next four-year budget debate will come down to a clash of philosophies on Edmonton’s city council.

At Tuesday’s council meeting, the table was set on whether the city should continue to borrow, or decide not to go ahead with key projects.

That debate will set a path for the next four years when city council goes over more detailed budget documents in November and December. However, councillors were given several warnings that interest rates will be going up and provincial grants will be declining.

That message became loud and clear to city council on Tuesday.

“The city needs to start thinking about what it’s not going to do to prevent any more risk to our borrowing, our debt, our tax levels and so on,” Councillor Mike Nickel said.

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“We’ve reached the point of no return here. Our backs are broken, as far as I’m concerned, at our level of taxation.”

“There’s a lot of warning lights flashing about telling us not to borrow,” Councillor Michael Walters said.

READ MORE: 2018 City of Edmonton budget is nearly $10M in the hole at midway point

Council’s comfort level is in part based on the guidelines set by the province. Edmonton currently carries $3 billion in debt. That puts Edmonton at 56 per cent of the provincial cap. The city’s guideline is even more conservative than that.

The poster-child project on whether to borrow even more is the Lewis Farms recreational centre. It comes with a $200-million price tag and is still in the design phase. It’s also a priority for west-end councillors like Sarah Hamilton, who fears the cost will escalate over time.

“If we put a project off from now to 10 years down the line, there might be a higher risk associated with that.”

Mayor Don Iveson hinted that a special levy could be a solution because he’s heard plenty of complaints from the business community that spending has to be reined in.

“For things that primarily serve one suburban part of the city, how does that area of the city contribute perhaps a little bit more so that the burden on the rest of the tax base is less? Those are some of the kinds of tools that were not available to us five or 10 years ago,” he told reporters.

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

The current provincial funding program for capital projects (Municipal Sustainability Initiative) has three years remaining on it, and city manager Linda Cochrane said to expect spending to be reduced.

“[We] very much will be talking to you about the MSI and the impacts that the cuts on MSI have had, and our projections on that. And I think the other thing that you’ll be faced with is a decision on the predominance, or lack therein, of retrofit versus new, and so the rehab versus new question will be on your radar as well.”

Unlike homeowners and businesses, the city has been borrowing at a low interest rate and locking it in for the 25-year length of the loan without fear that it will go up.