The impact of Thursday’s provincial budget is forcing Edmonton city council to take a hard look at whether to cut services, raise taxes or find a solution in-between.
In an emergency meeting Friday, city administration told councillors that municipal taxes would have go up by 0.8 per cent to make up for the impact of losing half the grant-in-lieu payments from the province by the end of 2020-21.
That increase doesn’t take into account the impact of losing $150 million in infrastructure grants over four years. Edmonton is also losing $13 million a year in operations funding.
Councillors have asked administration to prepare several scenarios in time for this December’s budget deliberations.
Projects supported by the now-cancelled Alberta Community Transit Fund included the Terwillegar Drive upgrade, the renovation of the Stadium LRT station and the purchase of electric buses.
Coun. Ben Henderson expressed mixed feelings about considering the option of trying to deal with the cuts without raising taxes, especially in light of what happened to Edmonton after the infrastructure cuts of the 1990s.
Henderson said it took a decade for the city to recover, and he urged the rest of council not to repeat the same mistakes.
“We have to think differently, and this is not the response,” Henderson said. “I think it telegraphs exactly the wrong kind of message out there and creates the wrong expectations.”
Coun. Mike Nickel rejected the all-or-nothing approach. He said Edmonton has an opportunity to work within its means.
“We do not have to face the choice of raising taxes or cutting services,” Nickel said. “With good long-term thinking, good long-term planning, and discipline and rigour, zeros are not just achievable, they will drive better productivity for our entire economy.”
Mayor Don Iveson, who cancelled a business trip to the Netherlands at the last minute after he learned the details of the budget, expressed dismay at the province’s decision to repeal the city charters, which would have allowed funding for Edmonton and Calgary to rise or fall with the fluctuations in the provincial economy.
Iveson said the city saw a decrease in infrastructure funding last year, with the promise they would share in the prosperity later.
The province plans to roll out a replacement program that will apply to all municipalities equally and give Edmonton less money.
The province doesn’t pay property taxes on buildings it owns, but instead gives municipalities grants in their place. Those grants will be cut by 25 per cent this year and another 25 per cent next year. But Iveson said the city still provides fire protection and other municipal services for those provincial buildings.
“Any other good corporate citizen in this city would be paying its fair share,” Iveson said. “So it’s things like that that represent a cumulative pile-on effect.”
City council is also looking for information on the financial impact of additional borrowing to pay for the West LRT in the face of funding delays from the province.