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CITY: Foundation says Edmonton will not meet $19.2 billion infrastructure deficit
        (AlbertaIndex, July 18, Friday) --- Edmonton will not be able to cover its estimated $19.2 billion infrastructure funding deficit over the 10 years to 2017 as its revenues are derived from property taxes, said the Canada West Foundation (CWF).
        In a discussion paper entitled “Delivering the Goods: Infrastructure and Alternative Revenue Sources for the City of Edmonton” the CWF concluded that Edmonton will not be able to address its infrastructure funding issue given the financial tools currently at its disposal.

It said: “The great majority of Edmonton’s infrastructure funding gap is in tax-supported infrastructure, but the city is singularly dependent on the property tax, which does not produce revenues that grow in tandem with the broader economy.”

From 1990-2007, the paper noted that inflation-adjusted per capita tax revenue collected by the city grew by only 5.7%.
This compares to 25.3% for the federal government and 44.5% for the provincial government, excluding resources royalties.

From 1990-2007, inflation-adjusted per capita taxes paid by Edmontonians to all levels of government increased by $2,873. Of this amount, only 1.5% went to Edmonton City Hall.

In 2006, the owner of an average single family dwelling in Edmonton paid $1,259 in municipal property tax. In 2007, that same homeowner paid $1,376. However, most of the $117 increase was actually offset by rising disposable incomes.

The actual increase — relative to personal disposable median family income —amounted to only $3 per year. At the same time, the additional federal and provincial personal income tax paid on the increase in median family income was $948.

The paper’s author, Casey Vander Ploeg, the CWF senior policy analyst, concluded that it is “simply unreasonable” to expect the city of Edmonton to effectively meet the infrastructure challenge if it remains so singularly dependent on the property tax.

“The infrastructure funding challenge facing Edmonton, and indeed all Canadian cities, constitutes a powerful argument for new directions and an expanded set of financing and funding tools. Many of Edmonton’s competitor cities, whether in Europe, southeast Asia, or the US have significantly greater access to a wider range of taxes or tax revenue sharing with other governments,” he said.

Mr Vander Ploeg said the city could consider raising revenues through the following: visitor-specific selective sales taxes, vehicle-specific selective sales taxes, sharing of provincial income tax revenue (indexing grants to growth in these tax sources), a “penny tax” or local sales tax dedicated to infrastructure, a “user pay” first policy, earmarking of property tax revenues for infrastructure, use of “smart” debt, public-private partnerships (PPPs) and policies linking property taxes paid to growth in disposable incomes.

“The purpose of the paper is to identify potential solutions for the City of Edmonton in reducing the shortfall in funding for building and maintaining infrastructure,” he said.

“Our goal was not to verify the size of the funding gap. Even if the funding gap were half that size, it still represents a monumental if not mammoth challenge.

“That study uncovered over 100 different techniques to finance, fund, and deliver infrastructure, and we chose a “top-ten” list for Edmonton. Infrastructure has become one of the most critical issues facing Canadian cities, and given the magnitude of the challenge, this is no time to tinker around. The focus needs to be on big ideas that offer the potential for big change, because infrastructure has become a very big problem.”

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