Keith Gerein: Big tax hike signals the kickoff to Edmonton's next municipal election

For those unhappy with the direction of this mayor and council, a budget this ugly absolutely gives them a tentpole on which to build a campaign

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Back in the 2021 civic election, then-mayoral candidate Amarjeet Sohi came under fire from his opponents for a lack of detail on his approach to taxes.

Rival Michael Oshry was particularly aggressive. With Sohi initially refusing to state a number, Oshry was only too happy to fill in the blank for him, suggesting the future mayor’s policies would add up to tax hikes in the neighbourhood of seven or eight per cent.

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Sohi rejected the figure at the time, and I admit I was skeptical myself, mostly because I didn’t think any city council would be brave — or brazen — enough to approve a tax increase that high in a challenging economic climate.

As it turns out, that skepticism may have been a miscalculation, given that we now have a proposed city budget calling for a property tax hike of 7.09 per cent next year without much improvement in services, if any. If passed by council, it would be the highest increase in a decade.

There is a lot to unpack here, and to be fair to Sohi, the circumstances of how we arrived at this point do not entirely match the warnings that were levied in 2021. I’ll get to that in a moment.

But regardless of how the details differ, the politics are pretty much the same. In my mind, this 7.09 per cent figure could very well represent the unofficial kickoff to the next municipal election, even though it’s two years away.

For those unhappy with the direction of this mayor and council, a budget this ugly absolutely gives them a tentpole on which to build a campaign.

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Coun. Tim Cartmell, rumoured to be considering a run for mayor, is one of those already staking out his ground, calling the proposed tax hike “unacceptable.”

Fellow council members, you’re up.

Find a persuasive way to defend this, or be prepared to make some cuts you hate in order to bring it down. (Or perhaps find ways to get better value for spending.)

Worth noting is that 11 members of council just approved a new zoning system — partly in the hopes of making home ownership more attainable and affordable — so ramping up property taxes that will do the opposite seems a bit counterproductive.

Moreover, 7.09 per cent isn’t an isolated figure. This year, taxes went up almost five per cent. Increases of 5.04 per cent and 4.53 per cent are the starting points for 2025 and 2026, respectively, and I suspect it will be difficult to keep those numbers from going up further, depending on what happens with union settlements and the city’s need to refill its emergency fund.

Add it all up, and if all those numbers come to pass, the record of this four-year budget cycle will show around a 22 per cent cumulative jump in taxes.

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For those wondering, these kinds of increases are not common but also not unprecedented. The 2007-2010 council, for example, raised taxes in this vicinity amid the global financial crisis of that time.

We are of course now in another period of financial challenge, though one of a different nature largely driven by the pandemic and issues around inflation, which are responsible for a lot of the city’s current budgetary woes.

Just as residents have seen their bills rise to keep vehicles fuelled and homes powered and heated, the city has experienced the same pressures. According to the budget documents, “utilities and other charges” are expected to cost $512 million next year, up from $387 million just two years ago. That’s a massive hit.

Inflated prices have also had an impact on housing construction and purchasing decisions, the city says, which affects property tax growth. As well, even with the Valley Line finally set to open, transit revenue remains behind projections.

Then there has been the explosion in homelessness — another gift from the pandemic — along with related problems of addiction, social disorder and crime. This has prompted the city to spend money on interventions it normally wouldn’t, largely because the province hadn’t shown much interest in helping until quite recently.

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Part of the city’s response has been a significant increase for police through a new funding formula, which council was somewhat pushed into as a result of rising public concern around safety.

This hike for EPS, plus a bigger than expected salary settlement for officers, is the major reason why this year’s proposed tax hike is above seven per cent rather than sitting closer to 5.5 per cent.

The point of all that context is to make the case that Sohi and council have been dealt a pretty lousy hand of financial pressures.

Also worth noting is that prior to 2023, there were several years in which council passed tax hikes below inflation. Those felt like the right decisions at the time, but it wasn’t sustainable. The bill was always going to come due at some point in some form.

Regardless, I’m not sure most of the public is going to care about this context or what went on in the past.

Fair or not, big tax hikes are going to be on the record of this mayor and council. They will be the ones having to answer for it at election time, unless their rhetoric around “tough choices” translates into more resolve.

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While there is not a lot of obvious wiggle room, previously untenable options are going to have to be reconsidered. And one area I think council really needs to dig into is infrastructure spending. The city is carrying a relatively high debt load that is set to increase, which, in turn, will see debt servicing costs move close to a half-billion dollars annually by 2026.

The city could save itself and taxpayers some grief by bringing that figure down, by asking which projects could be delayed, scaled back or outright cancelled.

(For those taking aim at the $100-million bike lane project, be aware that cancelling it would reduce the tax draw by just 0.02 per cent next year.)

The politics of city finances just got a lot more real. How it plays out in council chambers should be fascinating and polarizing, right up until the votes are counted in the 2025 municipal election.

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