Getting to 0%: City Council passed a property tax freeze

City Council and administration have worked together to achieve a 0% tax levy (a property tax freeze) for the first time in two decades.

This was a difficult budget — as is the case with many Edmontonians and businesses in our city, this year has been hard financially on the city. That being said, we understand that during these trying times, Edmontonians look to their City for support — and they need the important municipal services we provide.

This is why, I’m pleased to say, that City Council passed a budget that strikes the right balance between finding efficiencies, during these trying economic times, while also ensuring we’re supporting economic recovery and protecting key city services and infrastructure.

What does 0% mean for your taxes?

The 0% tax levy means that the average property in Edmonton will experience a tax freeze and stay the same.

Municipal property taxes are set by the City and account for approximately 70% of your total property tax amount. The other 30% is made up of education property taxes (set by the provincial government) — and may also include local improvement charges and community revitalization levy allocation, if applicable.

The calculation of each property owner’s share of municipal property taxes is based on a two factors: the City Budget and the total assessed value of all properties in our city.

If the value of your property stays the same this year, then your property tax bill will not change this year, this is due to the 0% tax levy. If your property’s assessed value changes more or less than the average change in Edmonton, your tax increase will be more or less than the average tax increase. 

You can find out more about the property tax breakdown here: https://www.edmonton.ca/residential_neighbourhoods/property_tax_assessment/tax-breakdown.aspx 

How we found cuts:

By approving $49.9 million in budget reductions, council has ensured that we are responsive to the budget constraints this year has presented us with. While also ensuring core municipal services Edmontonians need to weather this pandemic are protected. 

I know many may question, if we should have cut at all in our quest to give Edmontonians some tax relief through our 0% tax levy. I want to be clear that I do not think Edmonton can sustain a 0% tax levy again — 0% means that the City is in a deficit position relative to inflation.

That being said, there are two ways to get to zero per cent: one way is to cut your ongoing expenditures against your ongoing property tax revenue, which is what we’ve done in this budget. This is a sustainable cut. The second way to achieve zero per cent is to “paper” the cutover, using one-time money for one year, which still leaves you spending the same amount of money, without actually having curbed your spending.

Council did have a proposal brought forward, that would see us make no cuts, and use “one-time” money to cover up that deficit in our budget. This proposal was roundly rejected 12-1. Other councils across the country have done this: they continue spending by using reserves, rainy day funds, or other one-time sources of funds. This essentially just moves the tax increase out into future years for future councils to deal with when the “one-time” funds run out. This is an unsustainable cut. I’m confident the cuts we made won’t result in other councils having to pick up the slack by raising property taxes exponentially in the years to come. 

That being said, these cuts weren’t done without some pain. Like many Edmonton businesses and organizations, we are forced to make the difficult decision to lay off staff — something that I know will be hard for our organization’s morale.

These hard-working colleagues will be sorely missed, we are losing people with a lot of institutional memory and expertise in this staffing reduction. And I just want to say to those who do have to leave us that I’m so thankful for your service to our city.

While difficult, this decision allows us to keep the tax levy at 0% in this exceptional year — and I will stress that this reduction in staffing levels is not possible every year. The majority of positions lost are being covered with vacancies and through attrition, which would also not be possible on an ongoing basis. So this is a special circumstance in a difficult year. 

These staffing reductions will certainly make things that the City does more challenging, but against the pressures we’re facing it is the responsible thing to do.

We’ll also continue to look at efficiencies in our workforce. In fact, this is one of the things we’ve asked our new city manager to review when he starts in January, especially as it relates to management positions. 

What we saved:

During public hearing, we heard from Edmontonians who were concerned about certain municipal services and grants that were brought forward as potential cuts in the original budget proposal.

I’m very glad we were able to save some of the services and grants we heard Edmontonians defend so passionately during the budget public hearing including: the spay and neuter program, all the planned service hours for the Edmonton Transit Bus Network Redesign, and the Green Shack programming for example.

I’m also glad we were able to keep funding the Community Investment Grant program for another year, by using some of the money originally allocated to the Edmonton police. This allow the program to run while we rework the program so that it better aligns with the goals and outcomes of the City Plan and the social priorities identified by the Social Development branch. 

I supported this motion because I believe in the premise that investing in community is critical, especially right now, and that strengthening social supports and programs will allow us to better weather this pandemic. 

Transit is an essential element of our plan to allow us to get through this health crisis, especially since a high proportion of workers in our cities including essential services workers, depend on our transit system to participate in the workforce. I’m glad council was able to freeze cash fares for adults until May 1, 2021 — at which point, council will revisit this discussion in light of COVID-19 and the Bus Network Redesign. Council will then look at how we can ensure our transit system has the resources it needs to recover and grow.

We will get through this

I want to stress that this pandemic is temporary: we will emerge from it. And when we do it is essential the City is in a good position to recover.

This is why I pushed for a budget that is mindful of the fiscal constraints we are facing and also allows us to keep investing in assets and services that Edmonton needs to emerge, post-COVID, a healthy, urban and climate-resilient city that supports a prosperous metro region. In other words, to advance the City Plan we gave third reading on Monday.

Finally, I would like to make clear that our work on reducing costs and supporting economic recovery will not end after these budget discussions. As I mentioned in my previous blog, next year, we will get into the bulk of the “Reimagine” work, which will include major reviews of City services. This work will be critical to how the City adapts to the new normal and emerges stronger than before.