Edmonton Budget 2019: Where is the Money Going to Come From?

 

On Thursday Dec 5, Council held a Public Hearing ahead of the budget discussions Dec 11-13.  We heard from community serving agencies, the business community, and ordinary citizens. We heard from those with requests for financial support and those who insist that our spending decisions should be re-examined.

There is no question that the Provincial Budget in October put the City in a more difficult spot.  You heard that we had two choices: 1) increase taxes to compensate for lost provincial grants, or 2) cut services to keep the property tax increase at the previously approved 2.6% or cut yet more services to get to 0%.

I believe there is a third way: examine every possible alternative to deliver the services and amenities citizens need, forgo the nice-to-haves, and spend less money in the process.

 

Where the Money Is

We should re-examine the west LRT project.  This is by far our biggest spending commitment.  I know we can deliver a Bus Rapid Transit solution, an “LRT on wheel” alternative, that will meet our transit objectives while saving hundreds of millions of dollars.

Freeing up the dollars dedicated to LRT will allow us to continue to build our city while also reducing your tax bill.

And then we have options. We could improve other LRT lines, or add other BRT lines to other corners of the city, or not spend the funds at all.

The list of options is long but nothing can be done unless we find the money … and the money is in the West LRT project.

 

Land Management

There have been precious few, if any, other ideas that identify tens of millions of dollars in savings.  One idea, however, is for the City to sell the land it is developing in suburban areas. Administration advised that while a quick sale of that land could generate a one-time sum of $85M, their recommendation is to continue to invest in land development that doesn’t compete with the private sector.

I would not support converting our land assets into cash that we then immediately spend.  I would favor strategically selling this land, and putting the proceeds into a reserve that is invested and pays an annual dividend.  That dividend could then be spent on operations or put into projects. This was the City’s approach years ago with the sale of Edmonton Telephones, and the Ed Tel reserve generates annual returns of 5-7%.  An investment like that is far less risky than speculating on land, and a reserve approach preserves this asset for generations to come.

 

Terwillegar Drive

One project that must proceed is the Terwillegar Expressway.  The 2019 Alberta provincial budget eliminated the Alberta Community Transit Grant.  This grant provided $89.4M to Edmonton in support of transit improvement projects. $24.6M of that was earmarked for dedicated bus lanes and bike paths along Terwillegar Drive, which represents about ¼ of the funding for the Terwillegar upgrades.

While losing 25% of the funding for this project is disappointing, I believe that alternatives exist for delivering an expressway that will give SW Edmonton the transportation relief it needs.  I will advocate strongly during our budget deliberations for this crucial project.

 

City of Edmonton Workforce Changes Needed

City Administration has presented various proposals to get to a 0% tax increase. One suggestion not offered is a significant adjustment to the cost of the City’s workforce.

I believe that City Council should direct Administration to reduce personnel costs by 3%.

Personnel costs are projected to be $1.61B in 2020 or 53% of our operating budget.  A 3% reduction would save $48M, and reduce our personnel costs to 2017 levels.

It can seem easy to talk about job cuts or salary reductions when talking about numbers.    There are a lot of people hurting, wondering how they will afford Christmas, the next grocery bill or mortgage payment.  I have been in the position of laying off long-term employees simply because the organization could no longer afford them.  So I do not make this suggestion lightly.

But not taking action means increased property taxes, yet another hit on those struggling to live within their means.

I would challenge our City Manager to find this 3% reduction through job sharing, salary reductions, wage freezes, furlough days, or whatever means possible that reduce costs and preserve needed jobs.  Some positions would be eliminated, and our focus should be to contract out where possible, maintain front line services and eliminate positions elsewhere within the organization.

 

In Conclusion

We are in tough times.  I expected the October Provincial budget reductions, and quite frankly I expect more cuts.  We need to anticipate those reductions. We need to act now to get our spending in order. We need to get proactive about our finances, and avoid being in the reactive position that we are in now.  That means tough but prudent spending decisions.

As always, I appreciate your feedback and input.

Tim