Tax Increase Intolerance Means Better Budgeting Required

While in the throes of the 2019-2022 Operating Budget debate I knew something was amiss. We were staring at a 3.3% budget increase. Most of the new priorities identified by Council were not included within that and we had close to 130 public speakers; half telling us to spend more and the other half telling us to spend less. Memorable presentations from DATS users told us how insufficient current funding levels were for this critical service and dozens of business owners told us that the cumulative government tax burden was crushing them.

Politicians often lament how people always want better services and lower taxes as “obviously” contradictory objectives. Yet perhaps it’s not citizens who should be lamented, but us. We need to shift our mindset toward one where we demonstrate more precise value for taxpayer dollars and where we learn to do more with less. 

This isn’t easy, but with property taxes getting unbearably high for homeowners and businesses, we need to dig deeper. It starts with the City changing how we budget as an organization. Right now, previous budgets are the primary drivers of new budgets. New priorities for Council and citizens are left on the outside looking in unless they’re funded with more tax increases. 

That’s why I advocated for a priority-based budgeting (PBB) approach on the heels of our budget debate last December. In the past, when Administration wanted to cut costs, they often focused on departments rather than programs. PBB is much more precise than that, focusing instead on cutting what we don’t do well or shouldn’t do at all and investing in what is important to citizens and Council. PBB focuses on values and directs us to focus on our priorities and the best return on our investment. 

When the economy is slow and restraint is paramount, we can fund newer, higher priorities with money currently spent on low priorities, instead of increasing taxes. This means that every budget is a real debate about what matters most to citizens and to Council. 

This change needs to be indicative of a larger shift in mindset, toward one of demonstrating value. This means that we not only need to improve our transparency, we also need to improve our service quality. 

Whenever a citizen or business asks when a project will be completed or a permit approved, and we answer “it’s in the process” or “sometime this year” we aren’t doing our job well. Our purpose as an organization, including everyone from a Councillor to a Bylaw Officer, is to serve Edmontonians quickly and effectively. 

City services don’t have ratings the way hotels or restaurants do, but if they did, I’m sure Edmonton’s could use some improvement. When a Community League has to wait 3-5 years to get its community garden built due to onerous City regulations or when a business loses investment because of uncertainty surrounding a permit, we know that how we’re investing our tax dollars is less than ideal.

In addition to recognizing property tax fatigue, we must also understand the structural challenges facing large cities.

The way we grow needs to be transformed. Decades of low-density urban development have driven costs mightily for taxpayers. The promise of our new City Plan, in tandem with recent industry improvements, points us in the right direction. 

The Big City Charters for Edmonton and Calgary need to be built upon to give our cities meaningful fiscal tools, in recognition of the increasing responsibilities we face. 

Finally, a third of your property tax is collected by the province for education. If this revenue was collected through income or corporate taxes we would have more capacity to make strategic investments while reducing the troubling tax burden on property.

But firstly we can budget better, spend smarter, and do more with less here at home. We took an important step last week when Council voted unanimously to embark on this better Priority Based Budgeting journey. I’m optimistic that this will lead us to a place with a lower tax burden for our citizens and businesses, while still building the best Edmonton we can.

Alberta’s cities are facing 21st-century problems but we’re using 20th-century tools to tackle them. Unless we change how we finance, we won’t be able to afford to solve our problems. The best place to start is in our own backyard but alternative tools are needed. This fall I will be publishing a series on my website all about how we finance as a city and where we can go from here. This series will touch on everything from property and education taxes to the wide-ranging impact of the City Plan on our finances. I encourage you to visit michaelwalters.ca for more.

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