October 26, 2023
The City released its fall budget adjustment reports today, recommending updates to respond to increased costs and reduced revenues in order to deliver on 2023-2026 budget commitments. A 7.09 per cent tax increase is needed in 2024 in order to maintain services, which is 2.13 per cent above what was originally approved by City Council when it set the four-year budget in December 2022.
It will cost an additional $41.2 million to maintain services in 2024. The City’s financial pressures include a higher than forecast arbitrated salary settlement and significantly higher energy costs, as well as lower than forecast revenues from transit fares and ATCO Gas franchise fees. These budget pressures are expected to continue for the rest of the budget cycle. The City has already experienced most of these pressures this year, leading to the first budget deficit in many years.
“We are continuing to deliver 70 services that Edmontonians rely on every day, and more than 200 construction projects to serve them now and into the future,” said Stacey Padbury, Chief Financial Officer and Deputy City Manager. “We have limited resources, and we know that many Edmontonians are also stretched thin. We are only recommending budget adjustments that are necessary to maintain our services and deliver critical capital projects.”
The 2023-2026 budget provides for increased affordable housing, increased transit service, increased snow and ice control, energy transition and climate adaptation initiatives, as well as major construction projects like the Valley Line West LRT, the Lewis Farms Rec Centre, the rehabilitation of the High Level Bridge and Hawrelak Park, and the Yellowhead freeway conversion. The City adjusts its multi-year budget each fall and spring to account for anything significant that has happened since the budget was set.
In 2020-2022, Council lowered planned tax increases as the City supported Edmontonians through the pandemic. There was no tax increase in 2021 and the tax increase in 2022 was the lowest among major Canadian municipalities.
“These low taxes were necessary, but they aren’t sustainable, especially in the current environment with high prices and significant population growth,” said Padbury. “It’s costing the City more to deliver the same services all while experiencing a growing demand for those services. We can’t continue to absorb the financial impacts we’re facing without adjusting taxes or our service levels, and it will likely take both strategies to ensure we don’t create long-term financial sustainability issues.”
The recommended tax increase would mean that Edmonton households would pay about $750 dollars for every 100,000 dollars of their assessed home value in 2024. That’s $49 more than in 2023. This is an early estimate that will be refined as the City advances through the annual budget, assessment and taxation process. The annual tax increase will affect individual property owners differently, depending on how their property’s assessed value shifts relative to the market. Property owners will learn about their 2024 assessment in January, and will receive their 2024 tax notice in May.
The fall budget adjustment also includes recommendations for the 2023-2026 capital budget. The City is recommending an $88.9 million increase to the capital budget, mainly for affordable housing and critical renewal projects. This increase is less than one per cent of the approved $10.3 billion capital budget.
The City also released its first annual update to the carbon budget. It’s a tool to support Council’s decision-making as they adjust the capital and operating budgets. It also tracks progress on the City’s energy transition goals.
The City is actively working to reduce carbon emissions. The 2023-2026 budget includes more than $376 million dollars in services and construction that support our energy transition goals. The carbon budget update makes it clear just how much more needs to be done, together with the community and other orders of government, to meet our goals of being carbon neutral as a corporation by 2040 and as a community by 2050. Without further action, our updated forecasts show that we’ll deplete both our corporate and community carbon budgets one year earlier than anticipated. This is not the result of any budget decisions made by Council, but rather community impacts as activities return to pre-pandemic levels.
The fall budget adjustment reports will be presented to City Council for discussion and deliberation on November 7, 2023, along with the first annual update to the carbon budget. Council will discuss and finalize any budget adjustments during the last two weeks of November. Edmontonians can view the City’s recommended adjustments and learn more about the process at edmonton.ca/budget