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October 31, 2024
The City released its fall budget adjustment reports today, recommending both spending reductions and revenue increases as part of ongoing efforts to tackle budget challenges. These proposed changes will allow the City to continue to deliver the 70 services and over 200 construction projects in the 2023-2026 budget.
Since last fall, the City has been making adjustments to the four-year budget in response to inflationary pressures and rapid population growth, which have made it much more expensive to deliver the same services. Edmontonians’ changing service needs have also impacted the City’s bottom line. These challenges contributed to the City’s deficit last year and continue to impact its finances. The City is forecasting a $34 million deficit this year, based on financial results from the second quarter.
“While we planned for these pressures, they’re much bigger than forecasted when we developed the four-year budget in 2022,” said Stacey Padbury, Chief Financial Officer and Deputy City Manager. “We are delivering services beyond what the current budget can support and that’s not sustainable. Like many Edmontonians who continue to deal with high costs, we have to make some tough choices about what money we have coming in and what we’re spending it on.”
The City is recommending an 8.1 per cent tax increase for 2025. Council approved seven per cent of this increase in April 2024 to help manage the budget challenges and maintain services. One per cent of the increase would help to replenish the Financial Stabilization Reserve. The reserve helps the City to manage one-time budget pressures like deficits, but it was depleted during the pandemic and went below its minimum balance to manage the deficit in 2023. The remaining 0.1 per cent would help fund the 2025 election.
To limit the tax increase, the City is proposing $8.5 million in ongoing savings. The reductions include a lot of small changes, such as renegotiating the City’s phone contracts, which helped minimize the impact on services. It also includes service changes, like slowing down the Heritage Program. Staff have identified another $10 million in one-time savings to help rebuild the Financial Stabilization Reserve, which will be needed in the challenging times ahead.
“Our fall budget adjustment recommendations are about taking fiscally responsible steps to manage the budget challenges we face, and to minimize the impact of those challenges on our services and the people we serve,” said Padbury. “The challenges we face are complex and will take several years to manage, but we can make meaningful progress with these recommendations.”
The reports also include proposed changes to the capital budget. The City is recommending a $152 million increase to its capital plans, largely for neighbourhood renewal projects and the Terwillegar Drive Expressway. This represents one per cent of the $10.8 billion capital budget, which already has hundreds of construction projects underway.
Alongside the fall budget adjustments, the City also released its annual update to the carbon budget. It’s an important 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 reports will be presented to City Council on November 13, 2024. Council will deliberate and decide on any budget adjustments from December 2 to 5, 2024. Edmontonians can view the City’s recommended adjustments and learn more about the budget process at edmonton.ca/budget.
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