Budget 2011: 3.85%, With 3.4% For Infrastructure

Finally had a moment to post this old news: Yesterday City Council finalized our budget for next year. It is fairly consistent with administration’s proposal which I outlined in a previous post, with a couple of significant changes.

The 2% dedicated levy for neighbourhood reconstruction and maintenance was lowered to 1.5% for 2011 out to 2018 based on lower costs to do this work. The pace of work should not be affected by this. If inflation hits this program at more than 5% a year between now at 2018 we will have to either slow the work or raise that rate again.

The other major change were reductions of $10 million related to some cost control in human resources, $9 million of which I found and proposed in a motion that was passed unanimously, which corresponds to roughly a 1% reduction to the tax bill.

There were some other minor subtractions, such as delaying our census for a year, and additions like Sunday hours for all Edmonton Public Library branches and ongoing funding for Scona Pool that, taken together, tallied up to the final result.

A key point for me is that 3.4% of the 3.85% is for infrastructure. The aforementioned 1.5% for neighbourhood work, plus. another 1.9% is directly related to debt service payments for bridges, rec centres, and libraries.

This leaves 0.45% covering all other operating costs for the city – one quarter of the rate of inflation. Truthfully, Council did approve some stiffer hikes in user fees for recreation centres and transit, and we can’t do that every year. I resisted the transit fare hikes but concede that we are making significant investments in service and safety on transit which somewhat correspond to the fare hikes.

At the macro level, I am most pleased that Council seems to have turned a corner from how we used to do budgets – where Administration would bring forward a huge increase in the first draft and Council would hack it back down. This historical pattern led to a couple of games played by Council: one I call ‘budget battleship’ where we just hack a department that ‘feels’ fat and see whether we hit or miss fat, muscle or bone; the other is called ‘pin the tail on the budget’ where towards the end of debate a wholesale cut to the tax levy of 1-2% off the top is proposed with direction to the city manager to achieve it without service cuts.

These games on our part in turn led to corresponding odd behaviour from city administration, at least this is my impression. To deal with the slashing motions they would sometimes miraculously find other revenues to plug the hole. It was also widely suspected that Administration padded the draft budget to buffer the inevitable slashes. The third defensive tactic would be the occasional ‘Barney the Bear’ maneuver, wherein Administration would say that a cut to a department would result in the loss of a highly visible public service: Barney the Bear, for those of you who didn’t grow up hear in the ’80s, was the Police safety mascot who visited schoolchildren – he was first to go one year the when the EPS budget was facing cuts.

So, the point is, we seem to have moved constructively beyond these games. Now what we do is set a guideline and budget principles in the spring, which guides Administration’s work on the budget. So when they brought us 5% (2% for neighbourhoods, 1.9% for the infrastructure debt service, and 1.1% for everything else) it was in line with Council’s springtime direction. To get there they made $23.5 million in cuts and efficiencies, some of which will affect service marginally but at least we saw all this laid bare in the budget.

All of this progress is why I took exception to the suggestion of one of my colleagues that we could cut 3%, or $27 million, without affecting service. That would be a return to pin the tail on the budget and all the corresponding games played on both sides. Besides, I am very confident that you could not remove $27 million in expense from this budget without affecting service, partly because it would lead to Barney the Bear and partly because Admin already took out $23.5 million as I indicated.

So, is the city as lean as it could be? I don’t know. I want better benchmarking and performance indicators, and that’s under development, but I’m pretty sure that it’s leaner than it was four years ago, and we’re getting better cooperation from City Administration. I don’t want to undermine that with a budget machete, and neither did anyone else on council, which I believe is why that motion failed 12/1.

So, in more than 140 characters, that’s the story behind yesterday’s Twitter exchange (scroll down) which made the news.