How dare Edmonton city council piss away the hard-earned money of Edmonton homeowners? What do they need the money for? The Stelmach government is spending record amounts on Edmonton infrastructure and anyway we’re not being shortchanged as badly as Calgary, so we should be grateful to have a premier who favours us above our spoiled siblings to the south.
Edmonton mayor Stephen Mandel can blame himself for the currency of this narrative, even if he has been playing nice with the premier in recent months. Mandel’s strategy makes sense, in a way. Edmonton led the province in giving the Tories a bigger mandate last March, and Stelmach doesn’t face another provincial election until 2012. Edmonton city council, on the other hand, is up for grabs two years before that. What does Calgary Mayor Dave Bronconnier have to show for his animosity towards the province?
And there’s lots of money to be had. The province continues to lowball oil prices ridiculously, projecting an average price of $78 per barrel this fiscal year. With oil currently above $130/barrel, the province will collect at least another $7 billion in oil revenues on top of the budget’s forecasted surplus. For every dollar oil rises, Alberta’s government collects another $130 million, with two-thirds of the extra income earmarked for additional capital spending.
Edmonton wants a good chunk of that money, and Mandel appears to believe the best way to get it is to play nice. We’ll see if he’s right. Edmonton will get $2.1 billion over the next 10 years from the Municipal Sustainability Initiative, but everyone knows we are playing catch-up after having been starved for capital project investment since at least the beginning of the Klein era in 1993. In the meantime, he’s become the scapegoat for an average property tax increase of 7.5% forecast in the city’s 2008 budget.
Of course, ‘average’ hides a lot of disparities, with several lower income neighbourhoods, like Rossdale and Highlands, taking a hit of more than 20%.
On the face of the situation, it looks like City Hall is targeting the poor and spending irresponsibly. After all, if the feds and the province can manage a surplus, why not the city?
The difference lies in how the municipal government gets its revenue. Half comes from property and business taxes, with the rest coming from investments, franchise fees, EPCOR and other sources that haven’t kept pace with Edmonton’s spending needs. And when it comes to taxes, of every dollar you and I pay to government, the city only gets 5%.
The province still hasn’t addressed the fact that Edmonton taxpayers finance a lot of services and structures that are used—but not paid for—by people throughout the capital region, living in leech municipalities like St. Albert and Sherwood Park. And the city is compelled to spend on an ever-growing range of services offloaded by the province. Municipal money is going to health and social services, such as social housing and frontline mental health services for the homeless, which are clearly provincial responsibilities, while the provincial finance ministry records yet another ballooning surplus.
And the city gets not a dime of oil windfall revenues for operating expenses—like more frequent and thorough snow removal, which has been loudly demanded by primarily suburban homeowners who are also among the most prominent property tax whiners.
As for the tax increases themselves, who pays for them? Tax-fighter types say that the Left should be up in arms over this new burden that property owners will have no choice but to pass on to renters. This is complete bullshit, of course. Rent increases have almost nothing to do with property tax. The property tax bill in 2008 for someone owning a $350,000 house (very average these days) will be around $1,377 per year. This is the total bill, not the amount of the increase. (And homeowners also benefit from rising equity, which does matter, though there are those who pretend it doesn’t.)
At the same time, even real estate publications are pegging the average monthly rent increase over the last two years in Edmonton for a two-bedroom residence at $150. That’s an average of $1,800 in extra rent each year, or $3,600 over two years. At about $1150 per month for a two-bedroom unit this year ($650 in 2006), that’s an increase of over 75% in 24 months.
The amount of additional property tax the average homeowner will pay over the course of an entire year in 2008 is less than the average amount a renter will pay towards yet another hike in skyrocketing rents in just one month.
But perhaps the tax protesters are on to something. How about we tie rent hikes to property tax increases? This would give us all an incentive to take a closer look at how the city finances its services, with a better sense of who benefits and who, when one looks at the real bottom line, is actually getting gouged in Edmonton.
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correction
In last week’s Exile column, there was a line that read: “CPT and organizations like it act against Western governments and militaries, which undermines their legitimacy.”
It should have read: “It is not as though there is a lack of violence to oppose in those places, but what IS absent is critical to understanding the CPT and organizations like it—western soldiers. By acting solely against western governments and militaries, these ‘peace activists’ undermine their legitimacy. Ironically, they also implicitly and unintentionally confer a moral advantage on western military establishments by visibly relying on their good will and protection.”
