A proposal to more than double the limits on Edmonton’s borrowing could burden taxpayers with a $2.5-billion debt that won’t solve the city’s infrastructure problems, Coun. Karen Leibovici says.
Edmonton virtually wiped out debts rung up during the 1970s oil boom before council started a five-year, $250-million borrowing program in 2003 to pay for fire halls, interchanges, parks, roads, libraries and a seniors centre.
A report to council’s executive committee Wednesday suggests councillors change the rules so they can borrow even more.
It would let them spend up to 15 per cent of tax revenues repaying non-utility debts instead of the current 6.5-per-cent cap, making it possible to borrow up to $250 million annually for nine years.
While the report indicates this cash is needed to help provide $5.2 billion needed to overhaul and expand Edmonton roads, bridges, sidewalks, buildings and other facilities, Leibovici is concerned the money could be frittered away.
“I just worry that it becomes this pot of gold … that everything gets thrown into and there’s no way of separating what we really need.”
Borrowing the maximum amount would mean annual payments of about $21 million, which translates into a three-per-cent tax increase if no other source of funding can be found, says the report, which will be discussed next Wednesday by city council.
Maintenance of the projects would cost another $5 million to $10 million a year.
However, Mayor Stephen Mandel wants to rein in this potential borrowing bonanza. “I would like to be more restrictive. I don’t have a problem with borrowing money, but I want it for our major needs,” he told reporters.
“I’m concerned in the last round of borrowing, we tended to drift away from it and borrowed money for other things … like all people, we can’t have everything we want.”
Those “other things” included planting trees and improving signs, he said. He wants to dedicate future loans to big projects with long-term benefits, such as expanding the LRT system, repairing older neighbourhoods and building new recreation centres. “I would have a tough time supporting $250 million a year because they (now) have a problem spending $1.1 billion in capital.”
A recent report by a Winnipeg-based think tank, the Frontier Centre for Public Policy, found that Edmonton had long-term debt 46 per cent lower than the average of Canada’s eight largest cities. Using 2005 figures, the report said Edmonton’s long-term debt was $1,496 per household compared to $3,843 per household in Calgary.