While last week’s provincial budget passed without much fuss, this week our Council had to come face to face with some of the impacts of the provincial budget, specifically how it directly affected Edmonton’s municipal property tax rate.
In November of 2015, Council worked hard to bring the property tax rate down to a 3.4% increase for 2016. We later found that we received more revenue from property assessments in 2015(~$5.6 million) than we had anticipated, meaning the increase could be brought down to 2.8%. Considering the combined inflation (1.6%) and population growth (1.6%), is 3.2%, which is a reasonable guide for tax increases, I was quite comfortable with the 2.8% figure for the 2016 increase.
In last fall’s provincial budget we received a commitment from the province for an extra $20 million dollars from the Municipal Sustainability Initiative (better known as MSI). Council earmarked these funds for our vital neighbourhood renewal program. This allowed us to give property taxpayers a break.
But last week’s provincial budget brought a reversal in that commitment, meaning we have a $20 million dollar shortfall to tackle.
While I recognize that the provincial government is facing tough times right now, this type of turn-about is not what good intergovernmental relationships are made of. Municipalities need predictability and stability from provincial governments, and shifting commitments with little lead time doesn’t provide cities with a solid foundation for budgeting and planning.
Our Decision and Commitment to Neighbourhood Renewal
In order to account for this $20 million dollar hole in the budget, Council agreed today to make an adjustment to the 2016 tax rate from the 2.8% back to the original 3.4% to maintain necessary funding for the neighbourhood renewal program to maintain the current pace.
I believe that raising the tax rate by 0.6% this year to cover neighbourhood renewal is the responsible thing to do. If we had not done it this year, it could have resulted in even larger increases down the line or a delay in the schedule. Neighbourhood renewal is also a large scale infrastructure project that employs a good number of Edmontonians in construction - if we are looking to keep the economy rolling, infrastructure projects are sorely needed.
Your property tax bill also includes a tax that isn’t set by the municipality: the education tax. Last week’s provincial budget also revealed that the province has increased the education budget while exempting certain provincially owned buildings from paying education tax, so this will be made up by all other property tax payers. The province is therefore collecting 8.7% more than they collected from Edmontonians last years for education property tax. This equates to a 1.5% increase for the average homeowner on this year’s property tax bill.
All in all, that brings the combined rate for the average property owner to 4.9%. This amounts to an additional $109 per year, based on the 2015 average property value of $401,000.
The Coming Year
Council is not going to stop looking for efficiencies through a full-scale service and program review just getting underway, while also investing in projects that will keep Edmonton’s economy moving and building our city. It’s a difficult line to walk, but I’m confident that barring anomalies in the economy, we should be able to make progress on achieving a fair tax rate for 2017 and 2018.