City Government

2012 Operating Budget Passed

December 13, 2011

Maintains Council priorities, keeps tax increase for civic programs under 4%

City Council has set a 2012 Operating Budget to deliver the services Edmontonians expect every day—including police, transit, roads maintenance, fire rescue, libraries, parks maintenance, recreation programs and urban planning—for roughly $5 per day in taxes for the typical Edmonton household.

The budget of roughly $1.88 billion will require an average increase of 5.39% in municipal property taxes, which includes 3.89% for civic services and 1.5% to continue the Neighbourhood Renewal Program for reconstruction and maintenance of roads, sidewalks and streetlights in mature areas. The increase also includes 0.75% for debt servicing for major projects in the Capital Budget approved earlier.

“City Council has made key decisions to maintain levels of quality civic services Edmontonians expect while ensuring we are fiscally prudent to keep property taxes affordable and appropriate for the range of services we provide,” said Lorna Rosen, Chief Financial Officer & Treasurer.

A typical Edmonton house (assessed at $365,000) would see a tax increase of about $7.75 a month for people on a payment plan, or $93 for all of 2012. Utility fees for City-run operations of waste management and drainage will increase about $85 for the year or $7.08 on the monthly bill.

The final tax rate will be set in the spring after the Province announces the Education Tax.

Service Enhancements

Council advanced several key initiatives to advance Edmonton priorities including funding to add new police constables; an enhanced snow removal strategy; roadway maintenance increases; support to the REACH program and Community Services for the violence-reduction strategy; a traffic light pre-emption system; operating funding for Community Leagues; housing funding for the Cornerstones program; a venture capital fund; a pilot bus service to the Edmonton International Airport and the support for the Quarters Downtown CRL Plan.

Council also returned funding to several projects that were contemplated in cost-reduction strategies. Programs include a regular streetlight bulb replacement program; increasing the mosquito control program; alley cleaning; the flower planting and shrub replacement program; transit hours; parks servicing; and tree lighting on Whyte Ave and Jasper Ave.

Tax dollars are distributed among all municipal services in this breakdown (excludes user fees):

17% Police Service
12% Public Transit
11% Roads
11% Fire Rescue
10% Parks and Community Services
8% Debt Repayment
6% Planning, Housing & Buildings
5% Corporate Support***
5% Capital Project Financing
4% Neighbourhood Renewal
4% City Governance**
4% Corporate Expenditures *
2% Public Library
1% Economic Development Corporation

Notes:
* Corporate Expenditures includes Tax Appeals and Adjustments, Funding available to Council, Northlands Subsidy for Rexall Place, Indy, Risk Management.
** City Governance includes Mayor and Councillor Offices, Offices of the City Manager, City Auditor, Financial Services.
*** Corporate Support includes Corporate Services like Human Resources and Information Technology.

BACKGROUND

Budget Strategies

A number of strategies were employed to balance the proposed budget at a targeted tax increase, including:

Increase in revenue (about $25 million) from 2011 education tax room for operational costs in new capital projects, increased interest for late payments, transit fines and transit fare increase (moving from $2.85 to $3.00) and Right-of-Way Management License Fees.
Decrease in internal expenditures (over $5 million) from changing business delivery, branch reorganization and efficiencies, reduced internal maintenance schedules and reduced consulting services. Police also identified a net reduction of $2.3 million through efficiencies.

Administration used Council’s strategic plan – The Way Ahead – to guide short-term budget strategies that allow the City to meet the original tax target, while keeping on track for long-term goals. The City proposed increased revenues and reduced internal costs to achieve about $40 million in net savings in the 2012 budget. The reductions include reallocating or reducing staff by the equivalent of about 78 positions.

Sources of funding

The Operating Budget for civic services is funded by a range of sources, including 54% from property taxes, almost 20% from permits, user fees and fines, about 12% from EPCOR dividends and other dividends and investment earnings, and about 4% from grants from other orders of government for policing, housing, libraries and FCSS community grants.

Neighbourhood renewal

The Neighbourhood Renewal Program involves a combination of total reconstruction in some areas and preventative maintenance in others. The program benefited more than 20 neighbourhoods last year, with work on roads, sidewalks and streetlights. The program is supported by a dedicated tax increase to build a sustainable fund for renewal.

Cost increases

Demand for City services continues to grow as Edmonton expands in area. Population is also expected to grow 5.5% in the four years of 2011-14. Costs for services increase to serve the wider area and larger population, including transit service and emergency protection for new neighbourhoods, and greater focus on community safety as our urban centre grows.

City expenditures are increasing as it provides the services in many new facilities and infrastructure that have been developed in the last few years and the year ahead – including new libraries, fire halls, transit stations and an expanded LRT line. A number of key facilities coming on stream in 2012 include the Commonwealth Community Recreation Centre and the Southwest Division Police Station.

Cost are escalating in areas such as materials for road repairs, fuel for buses and police cars, and salaries for the city staff who deliver services. The consumer price index (CPI) estimates Edmonton’s inflation of consumer goods (including fuel) in 2012 at 2.1% and Stats Canada reports the estimates Non-Residential Construction Price Index (NRCPI) for construction labour and material costs will increase 5.8% in 2012. Other cost increases in the City’s budget include operational increases such as enhanced snow removal services and debt servicing for capital projects.

The total amount of the increased costs of growth, inflation and the impact of previous Council decisions is about $98 million.

A typical Edmonton household pays the federal and provincial governments income and education taxes. When combined with municipal taxes, about six percent of a household’s total tax dollars go to the City to fund civic services.

For more information:

Lorna Rosen

Title	Chief Financial Officer & Treasurer
Telephone	780-944-5524