Before Considering a Tax Increase. . .

I’m sometimes asked “Can the City find savings and efficiencies within the existing budget before increasing taxes?”

The short answer to this is the City and Council are actively doing this.

The City has gone through a series of budget reduction and efficiency exercises over the past decade to keep tax increases as low as possible and this work will not stop. 

Reviewing Past Work:

• Since 2015, efforts to find internal efficiencies have resulted in a cumulative savings of 1.9 billion dollars and reduced tax increases by 21.5%. 

Reallocating Funds Internally Towards Priority Areas:

• The most recent process of internal reallocation is dubbed “OP12.” 

• Where Council directed City Administration to do 2 things: 

1. Reduce the City’s operating costs by a minimum of $15 million annually. This process has reduced recommended tax increases by about 1% annually. 

2. Shift $240 million internally towards City priorities (such as core services) 

• Most recently, in March, Council approved another $8.2 million in savings through the OP12 process. These savings are being redirected to the financial stabilization reserve. 

During OP12, Administration went line by line for each city service, department, and program to classify and identify which areas, and to what extent, are considered a core service and made reallocations and recommendations based on these categories. There were 3 factors used in defining core services: 

1. Is it legally required under legislation for the municipality?

2. Is it practically necessary? (eg; ‘need to have’ vs. ‘nice to have’) 

3. Does it fall within the identified Council Priorities? *Listed here in no particular order - Community Safety and Well-Being, Economic Growth, Conditions for Service Success, District Planning, Arts & Culture, Mobility Network, Climate Adaptation and Energy Transition. 

Workforce: Prioritizing Frontlines & Reducing Management 

• The numbers of senior leadership positions and supervisory positions have also been reduced. 

• Last year, the number of Deputy City Managers was reduced from 7 to 5

• From 2020 to 2023, supervisory positions have been reduced by 96 FTEs, representing a 5.5% decrease in overall supervisors. 

• Frontline staff positions increased by approx. 367 FTEs during the same time period. 

A clear message from Council to Administration has been to put resources, including staffing, towards frontline services.

External Factors At Play:

While the City continues to find savings internally, there are some significant challenges we’re facing that often makes it so these internal efforts have a “sum zero” effect - Eg; we find $15 million in internal savings, but our costs went up by the same amount (or more in many cases). Here are a few external factors that our municipality is up against: 

• Higher demand for service due to population growth in Edmonton of 10%+ in just 2 years 

• Higher costs to deliver services as a result of inflation costs (historical averages of 2-3% annually vs. what we’re experiencing now between 4-5%),

• Urgent conditions that we need to address such as the housing and homelessness crisis and the climate crisis including responses to wildfire emergencies 

• Impacts from Federal and Provincial Budgets in which we are seeing consistent underfunding of Edmonton and a lack of equitable fundings between Alberta’s two major city centers. This letter that outlines some of these discrepancies and financial challenges can be found here. When we are not getting funding from other levels of government that is required, Edmontonians are essentially getting double-taxed. 

I believe continually improving efficiency within the City should be the standard. With this in mind, it’s impractical for the City to be able to absorb all costs internally without resorting to tax increases or impacting service delivery. 

I’m proud to see the City doing this work and I will champion for finding the balance between affordability and quality city service.

Read the other blogs in this series…

Spring Budget Adjustment

Audit, Audits, and More Audits

Transparency on Council Salaries and Office Budget