Calgary can learn from Edmonton's budget process

By
Real Estate Agent with Sterling Real Estate

Fed up yet with the budget bullying that goes on every fall at city hall? If not, you should be. The three-year look ahead doesn't work, at least not for operations. Anyone who suspects otherwise need only download the "proposed adjustments" for the 2010-2011 years left in the cycle. Then head to Edmonton's website, and review its 2010 draft budget. The former is 64 pages of drivel that would confuse an accountant, never mind a taxpayer or alderman. Edmonton's budget is an easy read that tells you everything you need to know, clearly, transparently and up front.

I picked one specific question and tried to find the answer in both documents. Revenue. That is an obvious item on any spreadsheet and should be easy to find. You would think. There's one reference in the overview of Calgary's adjustment report. It alludes to an overall decline in revenue, which seems like a mistake. "In response to the revenue declines and cost increases, the city has identified an overall shortfall of approximately $45 million for 2010." Sounds to me like revenue is going down, but why? The tax base has grown exponentially since the peak, when an average 98 people a day moved to Calgary. After much digging, I finally find the line, way back in the summary schedules. What do you know. Far from dropping, total revenues for 2010 will be significantly higher than 2009's $2.48 billion. The projection for 2010 is $2.58 billion; a $100-million-dollar difference. It turns out the so-called drop in revenue is NOT year over year, but down from what the bean counters initially thought (hoped) it would be when they projected 2010 revenues a year ago, when they did the three-year budget. No wonder it's not accurate.

But why is it so obfuscated? Muddling it further is the note: "This summary does not reflect elimination of payments to the city from utilities." Huh? I call up Eric Sawyer, Calgary's chief financial officer. He confirms the revenue figure is as interpreted. "I thought it was clear, but I'll accept if you don't," says Sawyer. He stands by the process, pointing out administration found significant savings despite a global meltdown that's hammered investments and slowed the economy. I don't completely disagree. But I'm distrustful because I need specifics instead of vague generalizations and statements that raise more questions than they answer.

Why, for example, are costs going up when everyone knows things are cheaper in a recession, when big spenders such as a municipality should have leverage to negotiate? Edmonton's budget spells everything out, up front, with revenue on page 25 of a document that's well over 500 pages. It breaks down "sources of funds" for 2010, from taxes to utility dividends, grants and franchise fees, and compares them with 2009 revenue, for a total of $1.4 billion, up $85.6 million, year over year.

Edmonton's budget gives more information than one needs to know. Calgary's documents leave the feeling there's something to hide, as is the case when information doesn't quite add up. Public watchdogs such as the Calgary Leadership Forum, the Canadian Federation of Independent Business, and the Canadian Taxpayers Federation have consistently called for change. Edmonton's mayor and council listened, abandoning the traditional budgeting process this year by reversing it.

Instead of starting with the previous year's figure and asking for an increase, each department defined its needs and then put a dollar value on it. Administration worked with councillors on budget priorities since February, conducting a thorough department by department review of spending and services. The new framework allows managers and elected officials to evaluate the work of bureaucrats, before deciding whether to continue the service, do it differently, or at all.

"The big difference we saw was, instead of saying they'd limit the cuts to three per cent across the board, they said they'd limit it to three per cent, and examine each department, line by line, so that some departments increased and others decreased in the amount their budgets required," says Martin Salloum, head of the Edmonton Chamber of Commerce. "Otherwise, you end up cutting things you shouldn't be cutting, and increasing things that don't need to be increased. Council is there to set those priorities, not build budgets." That's an approach to behold and emulate. What did our council do?

They cut 1.7 per cent across the board, with the exception of the police service which got an increase. Calgary Transit lost 21,500 hours of service, even though it's supposedly a priority. In Edmonton, high-priority programs such as transit were protected. Police services were taken out of the budget and told to report separately, so that citizens could have a clearer idea of how much the service costs. Calgary traditionally wins in the historic rivalry between the two cities, but in the battle of the budgets, Edmonton is the true city of champions.

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