Fall Budget Adjustment

The fall budget adjustment has been finalized, and I want to share what these changes mean for you and our communities.

This adjustment aims to deliver some immediate relief and affordability, while laying the groundwork for a more fiscally sustainable future. It includes strategic reductions to control costs, while safeguarding the core city services Edmontonians rely on and expect, like fire services, public transit, snow clearing, roadway and park maintenance, libraries, and much more. 

Council approved a property tax increase of 6.1% for 2025. For the average household, it amounts to about $47 more for every $100,000 of assessed home value. Increases like these are tough, especially as many families are navigating rising costs in their own lives. The cost of groceries, utilities, housing, and other essentials are straining household budgets, and I know people are looking for support. I also know families and businesses rely on the City to deliver quality services with good value for tax dollars. That’s why this budget adjustment has been so challenging, as we worked to find ways to reduce the tax increase down from city administration’s recommended 8.1%, without compromising essential services and our financial future. 

Compounding Cost Drivers

It’s important to recognize that while the tax rate is shaped by decisions made today, it is also influenced by the cumulative impact of choices over a much longer period of time, in some cases stretching back decades. The cost pressures our city is experiencing today have been driven by a number of factors, some relatively new, others that have been building for years. The primary pressures include:

1. Pandemic-era Tax Freezes

While necessary at the time, tax freezes and artificially low increases during the pandemic created a fiscal gap that must be fixed. Between 2019 and 2022, Edmonton approved the lowest tax increases in 25 years—even implementing a tax freeze in 2021. This means the city did not collect enough taxes to keep up with rising costs or maintain core services. On top of that, Council nearly exhausted the rainy day fund, which must now be replenished back to its minimum balance.

2. Inflationary Pressures

Rising costs for construction, labour, and materials have made it more expensive to provide the services we all rely on. Just as we have all experienced at the grocery store, our dollars are not stretching as far as they once did. This experience cuts across every expenditure the city makes. Despite collecting similar taxes in nominal dollars, in real dollar terms, our purchasing power has declined dramatically. This means it takes more money to maintain existing infrastructure, plow our roads, run our transit system, and provide city services.

3. Provincial Downloading

The provincial government continues to place an unfair tax burden on Edmontonians. We continue to shoulder more costs without corresponding support from the provincial government. Over the past decade, provincial infrastructure funding per Albertan has dropped from $424 per person in 2011 to $154 today. At the same time, the province has not fulfilled their responsibilities in housing, public safety, and social supports, leaving the City scrambling to fill gaps outside of our jurisdiction with limited revenue tools and funding. Recent changes to provincial election legislation are also forcing millions of dollars of additional costs onto Edmontonians.

To make matters worse, the province has stopped paying property taxes on its own buildings, leaving us with an $80 million shortfall. Council has promised that if the Provincial Government starts paying property taxes again, we will direct those funds to reduce your property taxes. This alone would reduce the tax increase by an entire percent.

4. Population Growth

Edmonton has welcomed over 100,000 new residents in just two years, driving a surge in demand for services. Our population has grown faster than expected, further straining City finances, as nearly all expenditure areas—including fire, emergency services, recreation, libraries, transit, and roads—must expand to meet demand. While this growth is a positive sign for our city, it comes with challenges. Unlike personal and corporate income taxes, which increase as the population grows, the municipal property tax levy is set as a fixed amount and then distributed. To keep up with population growth and inflation, the property tax levy must be adjusted accordingly.

5. Chronic Underfunding

Funding for city services and infrastructure has lagged behind growth for decades, creating a persistent fiscal gap that threatens Edmonton’s fiscal sustainability and quality of life. Unlike the Edmonton Police Service funding formula, which results in automatic increases tied to population growth and inflation, all other city departments rely on directed increases through Council's budgeting process. With limited tools and legislative authority to raise revenues beyond property taxes, this has left essential services like transit, snow and ice control, road maintenance, and park upkeep underfunded as the city’s population and infrastructure needs have grown.

At the same time, city administration have done a series of intensive budget reduction and efficiency exercises over the past decade, resulting in a cumulative savings of $1.9 billion. These kinds of exercises are important, but underfunding public services and infrastructure can only go on so long until the consequences are apparent: service level erosion, a deterioration of infrastructure, the inability to advance the City’s strategic objectives, and outsized tax increases - all of which we are experiencing today.

6. Sprawling Urban Development Patterns:  There is a direct relationship between Edmonton’s urban form and the City’s fiscal position. We all know sprawl is expensive. Low-density development has driven up costs without delivering sufficient supporting revenue. Today’s Council has inherited a $470M annual infrastructure renewal funding shortfall for everything from bridges, to transit, to facilities. This means we are only investing around 54% of what we should be investing into renewing existing assets. Not only does this result in failing infrastructure, but it drives up operational costs. Simply put, we have spread ourselves too thin.

While this Council has continued to course correct and focus on building in and up, arriving at a more fiscally sustainable built form will take years, and in the meantime, we will continue feeling the consequences. This is why work on Substantial Completion, Zoning Bylaw Renewal, District Planning, and the implementation of the City Plan are so critical.

Adjustments to Manage Costs and Protect Services

The fiscal realities we face today are shaped by a combination of historical decisions and current-day challenges, including rapid growth, inflation, and persistent underfunding. These issues require thoughtful action to address both immediate needs and long-term sustainability. Let’s take a closer look at how we are operationalizing this through the fall budget adjustment:

The approved adjustments reflect a balance between increasing revenues and reducing costs, and ensuring the tax levy only grows as much as necessary. Some of the changes include:

• Savings and Efficiencies: Administration found $8.5 million in ongoing savings, including reduced costs for contracts, materials, and equipment, and service changes like slowing down the Heritage Program.

• Offsetting Costs: We’re using increased revenues, like an $8 million increase in the EPCOR dividend and $9.7 million in franchise fee revenue, to lower the tax levy.

• Strategic Use of Reserves: The LRT Reserve is being used to offset projected transit revenue shortfalls for 2025 and 2026 due to an increase of riders using the Ride Transit Program.

• Capital Transfers: Reducing the Pay-As-You-Go transfer by $15 million while developing a longer-term plan to restore these funds, and laying the foundation for a Dedicated Universal Renewal Fund.

At the same time, Council made key investments without increasing the tax levy, such as funding for:

• Downtown Cleaning & Safety: Centre City Optimization to enhance cleanliness, safety, and vibrancy downtown.

• Support for Business Improvement Areas: Expanding cleaning and outreach efforts to Business Improvement Areas outside downtown.

• Industrial Action Plan: To support industrial development and economic growth.

• Turf and Tree Maintenance: Keeping our parks, green spaces, and urban forest well-maintained and accessible.

While these represent adjustments to the four year budget, it’s also important to remember that investments made during this budget cycle are still underway. We are continuing to invest in affordable housing, better public transit, more library hours, better snow clearing, maintenance of our green spaces and trees, public safety and emergency services, festivals and events, and economic development.

To support affordability and fiscal responsibility, Council rejected proposals to raise transit fares, and said no to cutting neighbourhood renewal. It's also important to note that Council did not support a number of proposed cuts that would have arbitrarily slashed departmental budgets without an assessment of implications, risking the financial stability of the organization and compromising public services.

Strengthening Services, Supporting Communities

While the budget process takes place over a matter of weeks, the financial health of the City is top of mind every single day and is embedding in every decision we make. I want to thank City staff for their ongoing work in identifying savings, managing challenges, and finding ways to keep Edmonton on solid financial ground. And to all city staff who continue to do the work of keeping our city running and moving every single day - thank you for your ongoing efforts. Your dedication to serving the people of this city and our organization does not go unnoticed and I am deeply grateful for everything you do. I also want to thank the many Edmontonians who reached out, shared their concerns, and provided input throughout this process.

These budget adjustments represent a necessary step forward as we navigate a challenging time. By protecting core services, investing in critical infrastructure, and planning for the future, we’re ensuring Edmonton remains a vibrant, inclusive, and sustainable city for generations to come.

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Bonus Budget Charts

To help contextualize Edmonton's property tax increase alongside other major Canadian municipalities, I have included some charts showing property tax increases by year, an average since the pandemic, and per capita amounts to illustrates how property tax relates to population.