Budget Series - Part 1

Written by Abigail Isaac, Navneet Chand and Tom Ndekezi

The idea of what exactly the government is can almost be as big as the real thing, depending on how you talk about it. Government can mean anything from Big Brother watching your every move (See: 1984), to your high school's student council, to a nondescript figure in a bunker under Parliament Hill with their finger hovering over a big red button. No matter what you mean when you’re talking about the government though, the conversation almost always involves money.

When it comes to running a city, especially one as big as Edmonton, it takes a lot of money. To make sense of all that money, to see where it’s going and know where it has been, we have the budget. The City of Edmonton’s budget is a financial mission statement, bent towards developing the outcomes that Edmontonians want to see. But in order to understand these outcomes, we first have to understand the Budget.

Through the Budget Series, we here at the City of Edmonton Youth Council (CEYC), hope to break the 745 pages of the budget into a four-article series explaining the basics, highlighting the key points, and covering everything about it that’s relevant to youth in Edmonton.

But before we can do all that *lets out a giant sigh* we need to go over some definitions.

What is the Budget?

The City of Edmonton’s Budget is a reflection of the work of Councillors, administrators, and Edmontonians that aim their efforts towards developing initiatives the community of Edmonton wants to see. It is a plan set in place to organize and understand how money will be spent by the City of Edmonton. In terms of who is responsible for the organizational work of the budget, all City of Edmonton departments and their employees have been involved in preparing the budget that we will be breaking down in this series.

Why is this important for Edmontonian youth?

For young people in Edmonton, this may be more important than we think. Learning about what the budget is, how much money belongs in the budget, where the money is being spent and why, are all important factors to consider as young Edmontonians who depend on the City to achieve our best interests.

If you want to learn more before diving on further into the rest of our Budget Series, please refer to the helpful resources included at the end of the article, there you will be able to find the Budget itself and understand more about what it is all about!

Where does the money come from?

To put it simply, the money comes from us. The taxes collected from both residential and commercial properties make up the majority of the money in the budget- around 55.7% of the total revenue. Each business and homeowner is required to pay a certain amount of tax depending on the value of their property. The second largest contributor to the budget are user fees, which make up around 13.5% of the total revenue. User fees refer to permits and fees collected when we — Edmontonians— use various programs and services, like recreational facilities such as the Clareview Rec Centre, or make trips to the Muttart or the Edmonton Valley Zoo. The rest of the revenue can be broken down into the following sections:

Proposed Budget Division for 2020-2022

Capital vs. Operating Budgets   

When looking at the City of Edmonton’s proposed budgets for 2019-2022, the first point of confusion you might come across is that there are budgets, i.e. two of them. There’s the capital budget and the operating budget, and no, this isn’t evidence of the underground shadow government that’s secretly running the city; they’re actually two very important distinctions. The capital budget concerns long-term investments like roads, bus stations, libraries, and other infrastructure projects. These are the things that are still going to be around even after the latest budget isn’t. The operating budget is more short-term oriented, covering day-to-day expenses like maintaining roads, paying for emergency services, and other expenses that have to be paid over and over again. In short, it’s the money that keeps the lights on.

Expenditures vs. Revenues

Revenue is money that the city plans to make, be that through taxes, service fees, or even by selling naming rights. Expenditures, on the other hand, are funds that the city plans on spending on new projects, or general upkeep. This includes everything from salaries for city employees to the money needed to hire contractors for a new infrastructure project. Revenues are balanced against expenditures, so in a year where the city is spending more than it’s making, we’d say that it’s running a deficit, while when the opposite is the case and money is left over, the city would have a surplus.

Departments, Branches, Programs

Departments are divisions of the city administration that are each in charge of different public service sectors. Our city has 7 main departments: Citizen Services, City Operations, Communications and Engagement, Employee services, Financial and Corporate Services, Integrated Infrastructure Services, and Urban Form and Strategic Development. Each department has a different number of branches depending on the size and the services provided. Programs are another part of city administration, and are arguably the most engaging part of the setup, mainly because they directly involve all of us! There are Children, Youth, and Family programs like NextGen, Garbage and Recycling programs, programs for Edmontonians with disabilities, new residents, students, schools and teachers and many more.

Why is the Budget four years instead of one year?

The budget spans over a period of four years as opposed to one year in order to accomplish a series of long-term goals. This is because the capital budget takes into account spending for new and existing infrastructure. Setting a budget for an entire city for a period of one year would not allow for much long-term planning, and would stifle the growth and potential that our city has when looking to the future. Accordingly, setting a budget for four years allows for incremental increases in investment in certain areas, like renewable electricity, for example. To give you an idea of the real numbers of the 4-year budget, we have some charts to break it down for you.

The Proposed Capital Budget for the upcoming four years (2019-2022) - which is being recommended with $4.3 billion in capital spending (including $0.9 billion in continued investment past 2022), looks something like this:

The Proposed Operating Budget, on the other hand, allocates $1.7 million in 2019, $5.8 million in 2020, $8.6 million in 2021, and $0.6 million in 2022. As a whole, it would look something like this:

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Generally, it takes time for cities to make meaningful financial investment in the areas that need it most, and in places with great potential. Our city is growing and requires long-term planning in order to successfully attain our municipal goals. That’s why the budget is set for a four year cycle as opposed to a single year plan!