2009 Budget

What follows was a guest column Vue Weekly invited me to write about Council’s budget deliberations last December:

I was one of nine councilors who voted in favour of the final 2009 city budget and I appreciate the opportunity provided by Vue to explain why I voted as I did.

My vote was in support of the budget overall; the resulting tax increase is the most visible (that is, widely reported) part of the budget, but it is the result of all the additions and subtractions that make up the whole budget package.

First, though, I should offer a bit of background on the process. Last May city administration sought direction from council for what we call a “guideline” by which to prepare the budget. The instruction we gave was to bring us the cost of delivering the same services in 2009 as we were delivering in 2008.

Administration took this instruction and prepared estimates, and returned in October with the news that the cost of delivering the same level of services in 2009 as in 2008 would require a 10.4 per cent increase in taxes. This initial proposed budget contained no new initiatives, and was mainly driven by previous commitments and the general increasing cost of doing business.

As an example of previous commitments, there was 0.6 per cent for borrowing to pay for approved projects like the Quesnell Bridge rehab and Southwest rec centre. On the matter of the general cost of doing business, the city relies on the same market for labour as other employers, and that market is still tight, though this pressure should diminish in the coming years as the economy cools.

Energy costs were also high when the initial estimates were produced. During the course of the budget we were able to safely reduce our estimates for fuel by $9 million and by $2 million for natural gas, which together reduced the draw on the tax levy by 1.4 per cent. We got lucky this year. I mention this to illustrate the extent of the city’s vulnerability to energy price volatility.

Our administration was able to recost a number of other items as the economic situation became clearer: some changes were favourable as bids came in under estimates, while others like the fees we receive from development applications and investment income will decline.

Council then debated the revised estimates into December and made further changes. We ultimately subtracted a lot more from the revised budget than we added, and the largest addition by far was for more police officers, which was unanimously supported.

I should also note that I supported most of the cuts that brought us down to 7.3 per cent. There were additional cuts proposed, which did not get majority support of council, but these would have substantially reduced services to citizens or simply pushed tax increases into future years. Overall I believe the final adjustments to the operating budget were prudent.

There is, as always, work to do within the city in terms of reviewing current service levels and administration’s efficiency in delivering said levels of service. I am assigned to council’s Audit Committee this year and look forward to pushing for better performance measures and setting a firmer guideline prior to next year’s budget debates. We also retain an independent auditor and all branches within the city are regularly reviewed. I do not think it is fair to suggest that the city is not working to be more efficient, though this is a widely held perception.

Our deliberations this year also included a three year capital plan (buildings, roads, LRT, and other infrastructure). As approved, this is a $5 billion plan that includes three recreation centres, the beginnings of a north LRT to NAIT, significant investments in transit and roads, refurbishment of aging infrastructure, and more. It should be noted that there remains billions more in work that needs to be done in the coming years that was not funded.

On balance we are moving forward with infrastructure, which was what people called for loud and clear during the election. This will cost money this year and in future years, but this city continues to suffer from failing to invest in the ‘80s and ‘90s.

Council also faced a difficult decision on how to fund local neighbourhood infrastructure (sidewalks, curbs and gutters) renewal and maintenance, which has been grievously under funded for years. There was a proposal to borrow for this work, but because this program will go on for decades, it would become a treadmill of debt to run the program. Council chose, and I supported, including a 2 per cent increase directly dedicated to fixing crumbling neighbourhoods and preventing newer ones from deteriorating. It means a larger increase now, but over the period of this work citizens will pay 60 – 90 per cent less because there will be no interest.

This work in neighbourhoods and other investments in bridges and buildings should have been funded a decade ago, and would have been a lot cheaper, but with prices moderating we have to get building. And, indeed, these projects will create jobs here in the city.

I believe that in 10 years people will say council did the right thing by investing Edmontonians’ dollars in infrastructure and preserving the services they value.