Weeks before the next four-year budget is presented to Edmonton city council, councillors are already stuck with a difficult choice.
They are facing the question of whether to increase property taxes or delay a successful neighbourhood renewal program to pay for hundreds of millions of dollars of necessary infrastructure fixes.
According to city administration, there is a growing number of infrastructure items in fair condition. That would include certain city facilities, bridges and transit.
If those are not improved in the next decade, the number of projects in poor or very poor condition could go from 9.4 per cent to 17 per cent.
But the 2023-2032 Capital Investment Outlook found that there is a $4.7-billion gap between ideal investment levels and forecast revenues.
That means the city needs to look somewhere else for the funding.
One option is to take money from the neighbourhood renewal program.
Started in 2009, the program uses $158 million of taxpayer funding each year to improve neighbourhoods by repaving roads and adding or renewing street lights, sidewalks, bike lanes, road crossings, trails, benches and other amenities.
So far, 186 neighbourhoods have benefited with 35 others slated to be part of the program between 2023 and 2026.
City administration has proposed taking either 25 per cent or 35 per cent of the neighbourhood renewal funding between 2023 and 2026 to use towards the necessary infrastructure projects.
A 25-per-cent reduction would free up $151 million over four years for the facilities, bridges and transit projects.
However, 15 neighbourhoods would have to wait longer for improvements, pushing the neighbourhood renewal program back about six years.
At a 35-per-cent reduction, $212 million would be available for the infrastructure improvements. City-wide, 18 neighbourhood renewal projects would be delayed, pushing back the program targets by 10 years.
Administration has not said which neighbourhoods would be affected but estimates the areas would have to wait about one to two years longer for their construction.
On Monday, ward Nakota Isga Coun. Andrew Knack said he didn’t need to see a list of affected neighbourhoods in order to rule out the option.
There is “no chance” he would vote for a neighbourhood renewal program reduction and delay, the councillor told his colleagues.
The other option is to raise property taxes by creating a renewal fund similar to the neighbourhood renewal program.
Administration is proposing there could be an annual increase to property taxes of one per cent between 2023 and 2026.
Councillors could choose to fund one, two or three classifications of infrastructure.
The first would be facilities and would include spaces like city hall, recreation centres, fire stations and office buildings.
Currently, 4.7 per cent of buildings (or 45 buildings) are in poor or very poor condition. With no investment, up to 30 per cent of facilities could be classified as poor or very poor condition.
The second classification would be bridges and auxiliary structures. Along with bridges, other infrastructure projects would include culverts, tunnels and both noise and retaining walls throughout the city.
Currently, two-thirds of the structures are rated in fair condition, while nine per cent are in poor condition. Bridges and auxiliary structures are always fixed before they reach the very poor classification.
Finally, the third portfolio would be transit and would include buses, LRT cars, LRT tracks and equipment, transit facilities and equipment.
With a one per cent tax increase, it’s estimated it would take up to seven years to fully fund the necessary infrastructure projects.
Mayor Amarjeet Sohi is hopeful there is a third option. With a new premier in place, he is banking on the provincial government to increase the amount of municipal funding it provides.
“When the Municipal Sustainability Initiative was announced in 2008, we were promised a significant amount of money from the province, but that money has actually decreased over time instead of increasing,” Sohi told reporters Monday.
He said Premier Danielle Smith has publicly committed to keeping all property taxes within the city, instead of the province taking a portion.
“That will allow us to close that funding gap and let Edmontonians use the property taxes that they pay to maintain the infrastructure that they own. And I think that will go a long way,” he added.
In a statement, a spokesperson for Alberta Municipal Affairs said the premier is in the process of being briefed on all ministries.
“Municipalities have long asked for funding programs that are predictable and consistent. Our government listened and has committed to implementing predictable mechanisms of funding which will allow municipalities to effectively plan for the future,” the statement read.
“We look forward to providing more specifics after the new cabinet has been sworn in.”
Council has not made a decision on how to pay for the necessary infrastructure improvements, instead deferring that to budget discussions.
The capital budget is set to be presented on Oct. 31 with the operating budget being released on Nov. 14.
Discussions are expected to last through mid-December.