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Whether it’s games that finish in a 0-0 tie or the finale to The Sopranos, there are endings in life that leave no one feeling satisfied.
As the adage goes, a good compromise leaves both sides unhappy.
City council added its own item to the list this week in its struggles to re-sculpt what Mayor Amarjeet Sohi called “the most difficult budget” he has seen during his years at city hall.
In the end, the mayor and councillors collaborated on some tweaks to improve Edmonton’s bus service and approach to encampments — two particularly glaring needs — while also finding a token trim to the projected tax hike.
The result was a sigh-worthy moment rather than something councillors will want to crow about. In fact, the best word I heard from any of the councillors to describe the final blueprint was “defensible.”
Of course, many cash-strapped taxpayers won’t see it the same way, and there will undoubtedly be some heat applied to members who appeared determined to achieve more tax relief but then didn’t put forward the public motions to accomplish it.
I guess you can add me to the hit list as well, as I was among those pushing council in the tax-reprieve direction and am now pulling back from that stance. In learning more of the broader context around the state of the city’s finances, there is reason to describe a budget like this as “defensible” — at least for now — and I’ll try to guide you through some of that.
The word is appropriate because in many ways this budget and its tax implications were unfixable from the start, made so by a bunch of interrelated factors — massive inflation, wage settlements, population growth, proliferation of complex social issues, years of provincial downloading and squeezing municipal revenue, public demands for more police resources, a series of past city tax hikes that were below inflation, and council’s own over-commitment to debt-financed projects.
Edmonton council passes 2024 budget with a 6.6 per cent tax increase
What’s in Edmonton’s capital budget for 2024?
In terms of the tax hike Edmontonians will be getting, there are actually four numbers worth knowing.
The first number is 4.96 per cent. That was the tax increase council initially put on the books for 2024 at this time last year.
But after a very difficult year due to many of the factors I described above, city administration’s first draft of the 2024 budget came out to something close to an 8.75 per cent tax increase. They knew that wouldn’t fly, so they worked to get the tax draw lowered, arriving at the 7.09 per cent figure we all saw when the proposed operating budget was released in early November.
Council then found several more savings in the past week, and that’s how we settled on the 6.6 per cent hike that was approved Tuesday.
Despite the work to bring it down, it is still the city’s highest tax increase in a decade and the fourth highest of this century — but it’s also worth knowing that it could have been much worse.
Still, that doesn’t entirely answer the question of why more substantial cuts or reallocations weren’t proposed.
In fact, some of those decisions may still be on the table. Council essentially punted on those decisions because they are waiting on two big pieces of financial information.
The first has to do with a big deficit the city is expected to record for fiscal 2023 of around $50 million, though we won’t know the final figure until all the receipts are counted after Dec. 31.
Whatever it is, council will have to dive into its financial stabilization reserve to cover it, and then come up with a plan to fill it back up fairly quickly because the pressures I mentioned aren’t all going away.
The other piece of information council awaits has to do with something called “OP-12.” This was a controversial motion council passed last year that called on city managers to find $60 million in savings over four years that could be taken out of city spending permanently, plus another $240 million that could be re-directed to core areas.
Rumblings have been going on for awhile now that the assignment has not been going well.
During this year’s budget deliberations, council and administration had at least one lengthy discussion on OP-12 progress but most of this was in private.
Instead, we had to settle for a flavour of the conversation from a few councillors, who used words like “sobering,” and “very concerned,” to describe what they heard. Coun. Andrew Knack stated that he felt administration had so far come up with just $33 million of the target, and suggested even that figure might be generous.
A year ago, city managers expressed optimism that they could achieve OP-12.
That we now seem to be in a very different place is a real and growing source of internal tension, raising questions about whether city managers are really committed to it, and whether council needs to apply more discipline or allow more leeway.
To bring this back to the current budget, some council members were hoping to use OP-12 savings to make more substantive changes, but were warned to hold off until those savings are actually in-hand — so as to avoid putting the city into even greater financial risk.
The hope now is some of those savings will be confirmed before the mill rate is set in April. If so — and that’s a big if — any found money could be used to reduce the tax draw or applied toward programs that didn’t make the cut this time.
Essentially, the big showdown over money and core priorities we were expecting this month has instead been pushed down the road until the spring.
But as Coun. Tim Cartmell put it, the city can’t keep kicking this can forever. At some point, he said, council has to actually make these big controversial decisions that will determine how committed they are to the change imperative — even though it’s not likely to leave anyone feeling satisfied.
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