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.