After several years of running deficits to support residents during the COVID-19 pandemic, the City of Edmonton is charting a course back to fiscal stability. City officials are now focused on balancing the books and repairing municipal finances in the upcoming budget cycle.
The Pandemic's Financial Toll on City Reserves
Structural budget variances since the COVID-19 pandemic have significantly depleted the city's financial stabilization reserve. This emergency fund, designed to cover unexpected costs, was repeatedly tapped to help ratepayers cope with the economic fallout, including a year where property taxes were frozen. The repeated draws have limited the city's capacity to respond to new financial surprises.
Chief Financial Officer Stacey Padbury explained the long-term risk of not addressing these underlying issues. "If we don't address them, we can end up in a scenario where the city runs a deficit," Padbury said. "Eventually, we can end up in a scenario where we're eroding services because we're trying to deliver the program within the budget but we have to do less of the program."
The Path to Recovery: A Four-Year Plan
The city's policy is to maintain the financial stabilization reserve at a level between 5 and 8.3 percent of total operating expenses. To recover from the pandemic-era shortfalls, council has granted an exemption allowing a five-year restoration plan, instead of the standard three years. Padbury stated the intention is to work on these structural variances so they can be incorporated into the new four-year budget cycle, which is just beginning.
Recent property tax increases have provided some budgetary breathing room, allowing administration to shift focus from immediate crisis management to long-term stabilization. Padbury identified 15 specific financial issues the city aims to resolve between now and 2030. The majority are revenue shortfalls that have persisted since the pandemic altered economic behaviour.
Key Revenue Shortfalls Being Addressed
The city is grappling with several persistent revenue gaps:
- A combined $10.1 million shortfall from transit fares and parking revenue.
- Lower-than-expected permitting fees, creating a $763,000 gap.
- A $1 million shortfall from location services (the "click before you dig" program).
- Pet licensing fees, which rely on an honour system due to a shortage of bylaw enforcement staff.
During recent four-day budget deliberations, Padbury consistently cautioned council against further draws on the fragile reserve. Council largely heeded this advice, though it did approve a $7.3 million draw to complete the Whitemud Drive widening project from Lewis Estates Boulevard to 231 Street and 215 Street. This project had already received funding contributions from Enoch Cree Nation and the provincial government.
The work to fill these budgetary holes is ongoing. The primary goal for Edmonton's financial leaders is to rebuild the necessary buffers to ensure the city can weather future uncertainties without compromising essential services to its residents.
