Fresh Thinking About How We Fund Our City

Policy in brief

We need to build a new financial formula to fund our city’s future: one that instills a culture of innovation and efficiency within administration, and works toward ending our reliance on regressive property taxes.

What we’ll do in the short term

I will introduce a new program called “Council’s 2%,” a goal for Council to work with city staff year-round to find $20 million in value annually. It’s incentive to continuously innovate and embrace ideas —such as switching to LED streetlights or smart bus passes — that improve performance at a lower cost. This should yield approximately $80 million over the next four term that we can invest in new infrastructure and maintenance.

Where we need to be a generation from now

My vision is that in 20 years, the city’s over-reliance on unfair property taxes is long behind us. Edmonton, and all Canadian cities, need better tools to pay for the services we expect and the city we envision. A new financial formula is possible, and is one I’m deeply committed to advocacy in Ottawa and at the Legislature for a better revenue model for Edmonton to fund its future growth and prosperity.

More thoughts from Don

Today, I announced my goals around how we fund this city today and in the future.

As a council, we tend to only emphasize the importance of finding efficiencies in our city’s operations when we see the sticker shock of the proposed property-tax increase. This shouldn’t be the case — we should be looking for efficiencies in our city’s operations year-round. It should be a fundamental part of our corporate culture. To deliver this as your mayor, I will introduce a program called “Council’s 2%” in which Council will work with city administration throughout the year to find an annual 2% increased efficiency in our city’s tax-supported operations, which should yield approximately $80 million over the next four years. We can invest those savings into infrastructure improvements and maintenance.

But a culture of efficiency is only part of the answer. I believe we must also look toward the future and begin to phase away our city’s over-reliance on property taxes. Property taxes are regressive; they don’t grow directly with our economy and sometimes they even punish those on fixed incomes and people who are unexpectedly unemployed. We need new and fairer ways to charge Edmontonians for the services that local government provides. This is a long-term process, but it is something that we need to start in earnest right away and it is something I am deeply committed to.

For more detail, you can read my remarks to the Economics Society of Northern Alberta below.

Don’s Speech to the Economics Society of Northern Alberta

Check Against Delivery

On the one hand, Edmontonians want to build a beautiful, prosperous, forward-looking city.

On the other hand, they also expect, rightfully, for Council to be fiscally responsible.

Fortunately, these two goals are not in conflict.

Instead, I believe we can achieve our aspirations for our city in a manner that uses tax dollars efficiently and responsibly.

Tax increases over the past decade reflect higher input costs — especially for labour and commodities like diesel, concrete and steel. We buy from the same market as the rest of Northern Alberta, and those cost pressures are as real for a city as they are for a citizen filling up their tank, or a business erecting a new building. These are the real costs behind delivering services that Edmontonians depend on every day.

But taxes have also increased because of a now-recognized need to invest in infrastructure, from new bridges to preventive maintenance on our existing roads, roofs, and pipes.

But I believe future councils cannot continue to rely so heavily on property tax increases, as councils have in the past, to build the city that we want to build.

As mayor, I have a short-term goal and a long-term goal around how we finance this city.

In the short term, Council’s focus should remain on leading city administrators to innovate for efficiency across our many different services and operations, from snow removal to bus dispatch, and from fleet maintenance to rec centre operation.

Innovation and efficiency are the keys to our short-term success: there are always ways to find new efficiencies without affecting the quality of services.

For example: switching to LED streetlights significantly lowers energy costs, and the bulbs last 4-5 times as long, so the labour savings are immense.

The recent changes to weekly garbage-collection scheduling increased employee satisfaction, created more consistent service for residents, and saved money on overtime.

Switching to Google’s cloud-based email services will save the city $1.2 million a year in licensing costs, compared to the Microsoft products they are replacing.

We need more of that kind of innovation across the city.

The problem is that Council often only thinks about saving money at budget time when we see the sticker shock of the property tax projection.

Council then asks city administration to make do with less and find efficiencies on the fly.

As mayor, I want that cycle to end.

Innovating within city operations should be a foundational part of city administration’s corporate culture. Council should be working year-round, not just during the budget crunch, pushing for innovation to build a more efficient operation.

We should never NEED to artificially restrict property tax increases — the city’s operations can get incrementally more efficient year-over-year, keeping property tax increases to a reasonable level to cover infrastructure investments and keep up with cost-drivers.

In early 2014, I will introduce a program I call “Council’s 2%,” which is a goal for Council to work with city staff and find $20 million in ongoing value each year. This can take the form of savings on tax-supported services, or in finding new non-property-tax revenue streams.

The value can can be in consolidated programs, technological investments that deliver a significant long-term returns on investment, reorganizations of city departments — any new way to deliver city services more efficiently, as long as we can demonstrate ongoing value for taxpayers.

We also need to regularly review all city programs and budgets against strong performance measurements.

Our managers have good ideas, and our front-line employees have good ideas for how we can deliver services more efficiently, and I will engage all of them in this work.

And together we’ll show our work every year, throughout the year, as we build up to that $20-million goal.

The council can then rely on that 2% to offset legitimate cost increases, or to invest in infrastructure.

I am confident over the next four years, with this goal in mind, we can find $80 million through smart ideas and create a better-managed, more responsive city for families and businesses.

However, better management can only take us so far. Finding efficiencies and innovations is, at the end of the day, only a partial solution.

In the long term, we, and all Canadian cities, must evolve how local governments charge for important services and infrastructure.

Right now, cities are responsible for 60% of all public infrastructure in this country, while receiving only 8% of the total tax revenue.

Meanwhile, Edmonton carries a disproportionate burden of regional services and infrastructure.

We’re already seeing signs of it, but our current fiscal framework is almost certain to hold us back in the future.

There is a disconnect between our resources and our responsibilities — and that is not a recipe for building great, globally competitive Alberta cities.

My vision is that in 20 years, the city’s reliance on property taxes is long behind us.

Property taxes are inherently unfair and regressive, especially to those on fixed incomes or those whose incomes are interrupted unexpectedly.

Edmonton needs better revenue channels — whether they are through user fees, a more balanced regional framework, new commercial revenue spun off from projects like Waste RE-Solutions, which is selling our world-leading expertise in waste management, or something as simple as a share of provincial income tax, like Manitoba has. Cities need more, better tools to pay for the city we envision. This is something I am deeply committed to.

Any revenue source you can think of is better than property taxes. The ongoing City Charter discussions are a window of opportunity to raise this issue with the province. This is something I plan to work closely with the mayor of Calgary on.

As your mayor, I will look toward the future and be a fierce advocate for Alberta and Canadian cities to put property taxes in our past and tap into other revenue streams that actually grow directly with our economy, and that respond to the varying economic circumstances Edmontonians experience, from pensioners to the unemployed.

But for the meantime, as mayor I will focus on keeping tax increases moderate, by stressing innovation and good value for money with the council’s 2% goal.

We will work all year to find value, and we will show our work, so that citizens can have the confidence that their dollars are well spent by their municipal government.

34 thoughts on “Fresh Thinking About How We Fund Our City

  1. If you want fiscal efficiency within the Corporation, I think the most effective step would be abolishing CSU52. The Civil Service Union, for technical, professional, administrative and clerical workers (not labour or municipal-service related jobs, which are covered under other collective agreements) is completely unnecessary for the positions it covers and creates a huge inefficiency in the compensation and productivity of City staff. The Union creates higher than market value salaries, offers guaranteed raises, does nothing to promote productivity, rewards seniority over performance, and and makes termination or reassignment difficult.

  2. I’m glad to read this, Don. I was living in Winnipeg in 2003/2004 when their then-mayor Glen Murray was trying to make a similar shift in tax revenues away from property taxes. Unfortunately, I think the way that tax shift proposal was communicated to Winnipeggers was confusing, and the City also didn’t have the support of the Province at that time, so it fell short. But the effort was nonetheless a really important one, and I think could have helped blaze a trail for Canadian municipalities towards fiscal sustainability. Long-term, pro-active thinking on City spending is also a worthy goal. All-in-all, a great idea!

  3. Don u have my vote.

    You definitely have matured as a man council member and strategic thinker.

    We must not be conservative in our approach to building this great city of ours. But find innovative ways to run finance and build Edmonton. This is what I see u doing as Mayor of Edmonton.

    Thank you

    Jerry kalchuk.

  4. Joshua has expressed views which are consistent with typical right wing thinking.
    Unions are essential to protect workers( I have personal experience of this) Some unions have grown to be too powerful but I believe that governments and employers should try to work with their unions for the sake of their front line workers. You only have to look at the situation in Health care at the moment to see that front line staff need the unions. The people who are costing the system big bucks are the execs who don’t belong to a union and get very lucrative contracts. These same sentiments apply to city employees on the front line.

  5. I don’t disagree that workers need protection, but the nature and market of work directly related to CSU52 make that a stretch in relevance. Salaries are a massive portion of the operating budget and a major opportunity to ‘trim the fat’. A huge pool of staff that aren’t negotiating salary, collect raises without performance, and have no accountability for their productivity is costing tonnes.

  6. Isn’t the first proposal essentially an annual 2% cut to city operations? Or is the city really currently so wasteful that it can handle this much of a change in ‘efficiency’?

  7. Connecting a long-term perspective with the short-term timescale of re-election is a vital integration of the election process and improving Edmonton’s economics. One key point from this was the focus on maximizing innovation, and the return of the City’s investment for innovation through long-term corporate success (e.g., Waste RE Solution). Your framework puts a longterm focus on supporting Edmonton innovation to develop a healthy economy. That us an excellent plan to diversify Edmonton;s revenue sources – and basic economics!

  8. Property taxes are incredibly regressive, and I agree that their needs to be a shift away from them. How do you plan to achieve this sort of a shift, and what guarantee is there that when the city acquires new tax sources they will eliminate property tax and not simply add in new taxes to increase revenue?

    Poor people are taxed based on the value of their home which they don’t even own (cause it’s mortgaged). Rich people are taxed on the value of their home, (which they own free and clear). As a percentage of income or net worth the lower middle class pays incredibly high taxes and the rich pay very little taxes.

    Moving to user fees does not do much better than a property tax. In a perfect world I would like to see a 1% income tax go to municipalities and all property taxes and most user fees abolished. (think of the dog licensing compliance rates is pet licenses were free. The transit user rates and the corresponding traffic congestion reductions and road repair savings if LRT rides were free instead of another tax that targets the poor)

    When Mandel talks about how those opposed to tax increases have no vision, I am insulted. It is not that we have no vision. It is that the poor should not be paying for the lofty visions of the rich.

    Before you support aesthetic initiatives like the downtown arena, or an urban beach, or a downtown canal, or a furnicular, or civic rebranding/marketing, I would at least like some acknowledgement that it is being largely paid for by working class people who make real sacrifices for this “vision”.

  9. I am glad to see that you are looking forward, and looking for new ways to do things. I agree property taxes do need to see a shift, but I definitely do not see them disappearing completely.

    I really like how you are looking toward efficiencies to improve the fiscal well being of the city. Businesses everywhere continually look for ways to improve efficiency in order to improve their bottom lines. The City of Edmonton should not be any different. If efficiencies can help reduce the burden on property taxes, I am all for it as long as there isn’t a hidden penalty. If any changes actually reduce or eliminate services then the efficiencies become simple cuts.

    I always have been a supporter of the new arena, and while I agree that we should have gotten a better deal, I also see and understand the way the framework is going to work. People say it won’t revitalize downtown, but I spend a fair bit of time downtown, and I can already see a dramatic shift in the number of people in the downtown at all times of the day. Evenings are still a little quiet, but it has improved. With the number of projects in the downtown moving forward, I am excited to see the growth over the next several years.

  10. Thanks for the question, Mike. I do think there are opportunities for pure efficiency, but the biggest potential gains are from innovation and from new revenues like dividends from our new waste solutions spin-off and other similar ideas.

  11. Very good speech with interesting ideas, but much too lengthy to read.
    It amuses me a bit, how since the West Edmonton Mall there has been a continuous competition between it and Edmonton’s downtown. Similarly there is continual debate over the airports. This is largely due to the
    International airport having been built so far away from the heart of the city, apparently because the land was cheaper. The growth of Greater Edmonton
    southward brings the airport closer. It behooves the city’s business people and councillors to bear that in mind. Hotels and other facilities should be established so that instead of being so far, it should be within minutes away
    by car, bus or taxi, as is the case in Montreal, Toronto and Vancouver.

  12. So. Getting more efficient is nice, what about the other end? Will you cap tax increases and/or put a cap on hiring (the 80 or so new people that are planned for due to the LRT expansion for example)?

  13. Nice speech Don. So far, you are winning my vote. While I don’t agree with everything in your platform, you appear to be more organized. You clearly label what the problem is, why it’s a problem, and how we’re going to fix it.

    I would like to suggest what is in my opinion an efficient use of tax payer dollars. How about running public transit 24 hours? There’s only a 6 hour or so gap that would need to be covered. How many potential employees cannot accept a job due to lack of transportation past public transit hours? How many people drink and drive after last call because trying to find a taxi is too difficult, and/or costs too much? I believe that Edmonton is on it’s way to becoming a 24 hour city and that we need to embrace this, rather than restrict it.

  14. I don’t understand why Council would want to do a line item review of the budget, to find savings. Wouldn’t it be far more efficient to have Council hold administration accountable for budget limits and progress that advances “The Ways”, and then leave the line-item evaluation to the staff? We must balance freedom to act with accountability for progress in the proper direction. I think that Council should be the ones to *focus* administration regarding the direction of their efforts and the available monies and general priorities. I believe it is a serious waste of time and a misdirection of expertise to have Council review the budget with a view to cutting staff positions or equipment purchases etc. One approach will let us grow, the other will give us small-minded thinking, paranoia and tension. I think you need to clarify this Don. Cheers!

  15. As an employee of the city (parks and rec) and with parents who are transit operators i can tell you that the problem is not the unions but instead a bloated management especially in the case of transit.

  16. As a recently laid off municipal employee in Community Services, I have to completely agree with Liam. Right now, the shift to cost-recovery for operations has led to poor decisions on the part of management, of which there are way too many.

    Look at the costing on projects such as The Meadows Rec Centre, the new park in Cameron Heights, and the Multi-Sport Tournament and Recreation Site. Instead of contracting out Grade, Level, and Seed work for new landscape projects to large companies who undoubtedly build a large profit margin into their bids, we could be saving money (in the millions) by keeping the work in house, utilizing the competent, experienced people we already have on staff to perform and administer the work. Right now, these staff (construction and survey) are following in contractors’ footsteps, basically running Quality Control, and then telling the contractor to fix their mistakes; as opposed to doing the job right the first time.

  17. Sorry Liam and Patrick, but I have to agree with Joshua. Management may be A problem as well, but they are not the entirety of THE problem. Unions fight for things that cost the company money. In this case, the company is the city budget. The problem is that, in the case of a government employer, the company doesn’t feel the sting of a union as much as a private company. In government, if the numbers no longer add up, then the citizens feel it. Property taxes go up, budget cuts get made, GST/PST go up, income taxes go up, etc. That is why government employees should not be union. Joshua only specified one sector, however I feel unions have out lived their worth, and are still getting paid for the work they did for previous generations. I feel that it’s too costly to the future budget to keep the union around. I’ve known several people that have worked for the government, and it sounds like government employees have it pretty nice compared to what some of the private sector employees have. Unions are about fairness. Not luxury.

  18. Re: Property Tax.

    When my Fiance purchased our home about 6 years ago, he was paying $600/year for property tax. The home was worth $295,000. How our home is worth about $265,000 and property tax is about $2500/year. How did the home value drop, and property tax increase over 4 times what it was?

    The increases need to not only stop, but be reversed!

  19. How about variois internal city project contractors spending with big budgets and no set deadlines and results? Seemed like a waste of money for people who knew something in project managemet. Is it going to be bixed Don?

  20. After numerous years we having the worst city councils that we never recall.
    They ignore the people who they represent.

    What is your specific program for seniors who are dealing with low income and taxes are increased every year and services are cutting very drastically?

    The roads are in tragic condition. There is no Quality Control from the City how the job was done and quality of asphalt. Contractors dictated the price and City is paying from taxpayers money without supervision. (See the new construction on 98 Ave from Capilano Mall – manholes in lower position then asphalt).
    It should be not acceptable. Why they can do the job right the first time?
    We do not have confidence that the dollars of taxpayers are well spent.

    As the Edmontonians can we count on reduction rather than increases taxes? In the past decades the seniors paid only Municipal Property Taxes.

    To renew the pet licence is only 5 dollars off for seniors why not 50%?

    The Katz Group should pay for new arena and operational expenses as well if he wants ne arena.

    We would like to see a Mayor who understand the people, is listening and
    can be trusted.

  21. From my understanding the province determines how cities figure out property tax. How do you propose to get the province to come up with a different formula?

  22. Unions are about fairness? Jason how can you say that? Yes they would be acceptable if it was about fairness outside their own membership. As a person who has been educated and promoted based on my own merits and paying the increasing costs for goods made by union workers, I do not understand that is how is fair. No one has ever stood in line to get me more money, benefits etc. while I sat at home and drank coffee. We are not in the age of old factories and mogul abuse, so give the union necessity a rest. Times have changed and are changing. Step up and look after yourself. That’s what my parents did, that’s what I did, and that is what my offsprings are doing. Go Iveson go!,,

  23. Great website Don. I have a couple general questions for you. As an entrepreneur I have to generate revenue or I don’t get paid a dime. It is that simple. I have no one to ask for money. I have to be self sufficient. With our city’s climbing debt I realize I am naive to think that my property taxes won’t be going up again. Cleaning up expenses is great, but have you thought of anything that would generate revenue?

    A few years ago we had beautiful company sponsored flower gardens along the Whitemud. Some people felt that they caused a distraction to drivers, but now we have those huge t.v billboards which are ten times more distracting than flowers will ever be. Can we not bring back flower gardens along the Whitemud, Anthony Henday drive and the Yellowhead? Hire a private company to take care of them and take a 30% cut of the profits. It is a win win for everyone. The drive is more pleasant, the company’s advertise creatively and the city makes a nice profit while providing a company a chance to grow and provide employment for the 50 or so employees that will be required to take care of the gardens.

    We could also lease the name of each city park to company’s for profit. Build beautiful signs and banners for the park and charge the company and again profit from the signs, the lease and employ another company to do the work.

    That is just two things that I can think of off the top of my head. Can we not think outside the box and generate some revenue rather than continue to spend money that we don’t have then ask for hand outs from the government as though we are children buying a bike and asking their parents to chip in for our new shiny toy?

  24. @ Greg: Thanks for the questions. I agree that we need to look to fresh thinking for generating revenue as well as reducing costs, but I see the need to proceed with caution when exploring these kinds of initiatives to preserve the integrity of the city through appropriate due diligence.

    You’ve proposed some interesting ideas here. I’m generally supportive of innovative ways to green our city and encourage entrepreneurship. I think we’d need to do some homework on an initiative like this to make sure that we can come up with a deal where the business case makes sense for local businesses, and that the revenue generation mechanism aligns with the values that Edmonton’s citizens expect the city to use to guide our decisions.

  25. Hi Don,
    Thank you for your response. My apologies, I didn’t notice your reply until now. Although vague, I appreciate your openness to new innovative ideas to increase revenue for the city. And by all means, let’s make sure we preserve our integrity through appropriate due diligence. Now, it has been 6 months since I last posted here. What specifically have we done to generate revenue for the city? I am on your side and I am not trying to be disrespectful. I just want to know specifically what we are doing to increase revenues and decrease costs. I do have great respect for you and I would prefer no vague responses. If my ideas are not appropriate methods of increasing revenue while preserving our integrity. I would like to specifically know what ideas are better. What are we doing to increase city revenues?

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