Differences Between Operating & Capital Budgets
I thought it’d be helpful to outline the difference between the Operating budget and the Capital budget.
The Operating budget reflects the estimated cost for the City to provide programs and services and any identified funding sources such as property taxes, user fees, and grants from other levels of government. Cities are not able to run deficits on their operating budget. Meaning the City only collects what it estimates it needs each year to run. These estimates are updated during spring and fall operating budget adjustments.
Examples of City-funded programs and services are:
Maintaining the roads and public transit systems that move people
Police, bylaw and fire rescue services to keep people safe
Parks and waste management to keep the city clean and healthy
Social programs and leisure activities
The Capital budget is for the things the City builds. It pays for building and maintaining infrastructure and purchasing equipment and fleet. Capital projects can use debt over the long term in order to strategically invest in the City’s infrastructure needs.
Examples of City infrastructure are:
Roads, Bridges, Active pathways
Transit (facilities, bus and LRT fleet, etc).
Recreation centers, Fire halls, Police stations
Park spaces
Capital budgets categorize renewal projects as well as growth projects. Renewal projects invest in existing infrastructure to keep it in good condition and extend service life, such as Peter Hemingway Pool or the High Level Bridge. Growth projects are new infrastructure, such as the new Coronation Park Sports and Recreation Centre or adding electric buses to Edmonton Transit Service (ETS) fleet.
One of the things I often get asked is: “Can the City just cut money from one area to pay for another thing instead?”
It is important to note that the Capital and Operating budgets are not interchangeable. A new road project, for example, cannot be canceled to pay for more snow clearing. That being said, as I have learned, capital investments do impact operating budgets at times in the form of debt servicing, or staffing considerations for a new facility once opened. Money can be moved and prioritized within the budget categories though. With a set amount in each budget Council needs to ask what should we stop doing, do less of (or more slowly), and what should we do more or prioritize?
This is why connecting with you, the residents of Ward Anirniq, is so essential. Your feedback lets me know what is important to you and what I need to advocate for as part of the upcoming budget deliberations and beyond!
