June 22, 2024

Saluti Law Medi

Rule it with System

Edmonton sets property tax rate at 8.9% for 2024

“Despite some disappointments I have, this budget allows us to move our city forward,” Mayor Sohi said

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Edmonton property owners will pay nearly nine per cent more in municipal taxes this year, the highest increase in more than a decade, after city council finalized the tax rate late Tuesday evening.

City council unanimously approved the 8.9 per cent increase at the end of a marathon spring operating budget meeting that concluded after 11 p.m. The rate is higher than the 6.6 per cent figure set late last year, and the newer 8.7 per cent figure city administrators recently recommended to cover higher-than-expected costs from inflation, workers’ compensation premiums, utilities and labour negotiations.

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Council added spending for event attraction ($2 million), extra cleaning in the city’s core ($1.56 million), and snow removal assistance program for seniors ($516,000) slightly raising the rate to its final number. Tax increases typically don’t deviate significantly from the rate set in budget debates every fall.

Of the total tax increase, 5.1 per cent is meant to maintain existing city services at current levels.

Mayor Amarjeet Sohi, speaking to reporters Wednesday, said it wasn’t easy for council to agree on the “absolutely high number” of 8.9 per cent, acknowledging it is causing concern for Edmontonians.

But he said council since 2021 has invested in restoring, sustaining and enhancing core services such as police, fire services, recreation centres, public transit, and hiring transit security officers and social workers.

“This budget allows us to continue to provide, sustain, and enhance those core services as well as build more affordable housing and take action on climate change,” he said.

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Sohi also lay the blame on the provincial government for the hefty increase.

He said reductions to municipal funding and shifting responsibilities to cities in recent years put the municipality in a tough position. For instance, Edmonton’s fire department spends about $28 million annually responding to medical calls, and the city paid $2.2 million to support Alberta Health Services’s response to shigella last year.

“We have to make it up,” he said. “We cannot stop doing those things because the province is not fulfilling their responsibility, but we want to protect Edmontonians, and that is why we are seeing property tax increases in (this) way that we have to grapple with.”

Ward papastew Coun. Michael Janz echoed the mayor’s views.

“Edmontonians need to know their taxes are going up because provincial funding is going down,” he told reporters Wednesday. “We are not asking for a special deal, we are just asking for a fair deal.”

Ward pihêsiwin Coun. Tim Cartmell, however, doesn’t think council members blaming the province for Edmonton’s finances makes sense.

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“That is a political, performative statement. They don’t owe us anything. They used to benevolently give it to us, they’ve stopped,” he said Wednesday.

“What (city council) has not done is adjust our spending profiles to (the province’s) spending profiles. They’ve reduced, we haven’t. Now some things we can’t, which means we need to reprioritize, and that is an exercise we have not done.”

Earlier this month the mayor warned higher property taxes could be on the way if the Alberta government doesn’t give the city $60 million that would have been paid to cover past years of grants in lieu of property taxes before the program changed.

Spokesperson for Municipal Affairs Minister Ric McIver, Heather Jenkins in a statement late Wednesday, said the province is in talks with Edmonton.

“We remain committed to working with the city to address their concerns,” she wrote.

Jenkins said the program that provides funding to Alberta’s towns and cities — the local government fiscal framework (LGFF) — was created with the cooperation of municipalities.

This program calculates funding by tying the “revenue index factor” to provincial revenue at 100 per cent with a three-year lag “so that municipalities can plan accordingly,” she wrote.

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“The LGFF provides the same base level of funding as the previous program, the municipality sustainability initiative,” she wrote, although the metric for municipal revenues changed from 50 per cent to 100 per cent.

“Operating funding was also doubled from $30 million to $60 million.”

She said Alberta’s 2024 budget includes $25 billion for infrastructure but did not specify the funding directed specifically to Edmonton.

On Wednesday, council passed several followup budget motions including the mayor’s request for an action plan to respond to “structural budget issues and growth challenges,” and Cartmell’s request for an analysis of capital spending to find ways to reduce impacts on the tax levy or reallocating funds.

‘Horrible budget’

No member of city council appeared happy with the final number, although all 13 ultimately supported it.

“It’s horrible, awful, terrible in every way. But here we are. We have one week from today to bring the bylaws,” Cartmell said, saying he voted in favour because of the tight time restrictions to set the budget in city bylaws.

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The mayor, however, was also disappointed other council members voted to increase spending Tuesday night — he opposed additions — and was tempted to vote against the budget, but doing so would be “reckless, irresponsible and opportunistic” because it would land the city in the red, which is not allowed.

“I felt that going beyond what administration recommended would be seen as us being out of touch with the reality of the affordability challenges that Edmontonians are facing,” he said during the Tuesday meeting.

Ward Anirniq Coun. Erin Rutherford, ahead of the budget vote, wrote in an opinion editorial for the Edmonton Journal that financial stewardship is about more than keeping taxes low, and the pressure to do so can harm the city and the quality of its services long-term.

Protecting Edmonton’s financial health “means supporting the best use of tax dollars and organizational resources in order to leave the organization and city better off than when I came into this role,” she stated. “When we don’t address growth and inflation, we are digging ourselves a knowingly bigger hole and not effectively using our resources because they are spread too thin. I’d argue that’s the opposite of financial stewardship.”

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Tense meeting

The Tuesday debate was tense at times as it ran late into the evening. About five hours of the meeting was held in private.

Council also reversed course by recalling votes three times, an unusual procedural move.

A motion from Ward Sspomitapi Coun. Jo-Anne Wright to cut $108,000 for a new sergeant-at-arms position at city hall initially passed but was defeated in a recall.

Ward O-day’min Coun. Anne Stevenson’s motion to spend $1.56 million for enhanced cleaning initially passed, then was defeated 6-7 when Rutherford moved for a recall and changed her vote to “no.” Later, however, Cartmell also recalled the vote, changed his vote to ‘yes’ resulting in a 7-6 vote, approving the spending.

Council members became frustrated with the late-running meeting. Some could be heard swearing under their breath on live microphones in chambers when the votes were recalled.

Rutherford also grew frustrated with Ward Ipiihkoohkanipiaohtsi Coun. Jennifer Rice’s motion attempting to move $6.8 million out of the city’s rainy day emergency fund, the financial strategies account, to reduce the tax increase this year. She asked Rice if she “regretted” making a similar motion in a previous budget because that past decision left council without wiggle room to handle later financial challenges, and not keeping this money would leave the city unable to handle risks that arise. Rice later responded the city deals with risk every year. Her motion was ultimately defeated 2-11.

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Rice, speaking to Postmedia Thursday, pointed out Stevenson’s motion that passed used financial strategies as the funding source — so the vote for that motion did not affect the tax rate. That pool of money is also the same funding source Rice eyed to use to reduce the tax increase, money collected as a result of council’s cost-saving exercise referred to as “OP-12,” she said.

“OP-12 is tax-saving money, we should give it back to the taxpayers,” she said. “If we’re in a situation where the tax rate is so high, why can’t we do that?”

Rice said “every year we are dealing with emergencies,” and the financial strategies reserve is council’s account meant to spend on such things, not the savings account she wanted to pull from. Rice also said “of course I do not (regret)” the 2021 motion that put Epcor’s dividend on to the tax levy because it kept the increase from being higher.

Ward Dene Coun. Aaron Paquette also attempted to speed up the proceedings by twice “calling the question” — a procedural move that forces council to halt debate and vote on the matter at hand. One attempt was successful, but the mayor shut down the second attempt so other councillors could ask about the event attraction funding.

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Other changes to Edmonton’s operating budget system stem from lower-than-expected transit revenue, $3.5 million less in grants from the provincial government in lieu of property taxes for its Edmonton buildings, and $1.7 million less from business licence revenues. But the city will bring in $4 million more in tax revenue from properties that increased in value and pay $2.5 million less for pensions.

The capital city joins the City of Calgary in approving higher-than-expected tax increases this year — Calgary council finalized that city’s 2024 tax increase at 8.6 per cent last month. Red Deer council increased that city’s property taxes by 6.15 per cent in January.

Compared to Edmonton, other municipalities in the region set these property tax increases for 2024: 8.66 per cent in Stony Plain, 6.45 per cent in Beaumont, 5.87 per cent in Strathcona County, 5.3 per cent in St. Albert, 5.25 per cent in Devon, 5.21 per cent in Morinville, 5.1 per cent in the City of Leduc, 4.2 per cent in Fort Saskatchewan, 4.9 per cent in Spruce Grove, 2.9 per cent in Parkland County, 1.7 per cent in Leduc County,  and 1.37 per cent in Sturgeon County.

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@laurby

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