Why growth increases Edmonton's taxes

Why do city taxes have to go up to pay for growth? It's a good question that often gets asked around budget time.

Mike to Troy · by email

Why do city taxes have to go up to pay for growth? Shouldn't growth increase the taxes we collect?

Sure, we need more services to support new residents, but they should also pay taxes and fund those services, right?

Well, not quite.

Growth doesn't pay for itself

Look at the current budget adjustment, for example. Growth was pegged at around 1.6% in 2025, but the measured assessment growth was only $23.2 million, or about 1%.

Growth the budget expected in 2025: 1.6%
Assessment growth actually measured: $23.2M
What that works out to: ~1%

That gap is something that we actually understand pretty well. A city report from 2016 acknowledged that with the construction of three new neighbourhoods, even after accounting for commercial and residential taxes, utility fees, and government grants, the city would still fall $1.4 billion short on the $10.6 billion cost to build.

Even dense growth can be a drain

But it's not just new sprawl. Even growth in our dense areas can be a drain.

Imagine for a moment a young professional from Toronto responds to a Facebook ad and joins up as a roommate in an apartment in Edmonton. This person will ride buses, use rec centres, and other city programs, but there's not a cent of municipal tax uplift here. The apartment is still assessed at the same level of property taxes with one or two residents living there.

But the cost to the city for that resident? That's legislated.

Our police funding formula requires police funding growth based on increases in population and inflation, regardless of changes in the tax base. This year, the funding formula is increasing the police budget by $17 million, with an additional $6.9 million being added to hire staff to watch body cam footage.

The province gets the uplift

Now, don't get me wrong, interprovincial migration is great for Alberta. That professional is going to be contributing income taxes, excise taxes like gas, and benefiting the local economy.

But the city won't get a penny.

There was a previous agreement negotiated with the Alberta NDP called the City Charter Fiscal Framework. It acknowledged the prominent role that cities play in attracting talent and innovation and growing the economy, and it gave cities a share of the provincial tax uplift that they cause.

But one of the first things that Jason Kenney's UCP did in office was to tear up that agreement.

Growth is valuable and profitable to the province. It's why we launched the Alberta is Calling campaign.

But for our cities, with extremely limited tools to capture revenue, supporting growth is just another subsidy from our property taxpayers to the provincial government.

Because the province won't pay their fair share.