Non-Tax Revenue Challenges
The following blog is a summary of the section “Non-Tax Revenue Challenges” from the fiscal gap report put together by City Administration. The full report can be found here:
https://pub-edmonton.escribemeetings.com/filestream.ashx?DocumentId=236515
With the City’s heavy reliance on property tax increases within the last two decades, non-tax revenue has also fallen behind.
In 2000, non-tax revenue funded 54% of the City’s operating budget with property tax funding 46%.
By 2024, the numbers shifted to 41% for non-tax revenue and 59% for property tax funding.
Forms of non-tax revenue include transit revenues and recreation user fees, these two specific streams have not kept pace.
ETS Fares
In the past 11 years, the costs of providing transit have outpaced ETS’s revenue generation.
ETS own-source revenue, including all fare and non-fare revenues, grew from $48 million in 1997 to $135 million in 2014.
From 2015 to 2019, ETS revenues began declining, despite relatively high population growth rates in Edmonton, reaching $130 million in 2019. Due to the impacts of the COVID-19 pandemic (including suspending fares), revenues dropped sharply in 2020 to $60 million, then to $57 million in 2021.
ETS revenues have since grown to $97 million in 2023, but have not returned to levels seen prior to COVID-19. ETS revenues per capita, inflation-adjusted 2023 dollars, were $140 in 1997, lowering to $131 in 1998, then gradually increasing year-over-year to their peak of $187 in 2013.
From 2014 to 2019, revenues per capita underwent fairly steep continuous declines, reaching $144 in 2019—close to levels seen in 1997.
The impacts of the COVID-19 pandemic sharply reduced revenues per capita to $65 in 2020, which further fell to $59 in 2021. ETS own-source revenues per capita have since moved gradually upwards to $85 in 2023. Per-capita revenues in 2023 were 54% below peak levels experienced in 2013. While COVID-19 had signicant effects on all transit systems across North America, the downward movement of ETS revenues per capita began in 2014. Before any impacts of COVID-19, ETS experienced a 23% reduction in revenues per capita in the six-year period from 2013 to 2019.
As one of the City’s largest non-tax revenue sources, ETS revenues are a critical revenue stream to support service delivery while easing pressure on the tax levy. ETS revenues enable the City to deliver transit service beyond its budget constraint, as the revenues from user fees enables the City to leverage public dollars with the private dollars of residents who demand the service and are willing to pay for it
Recreation User Fees
Recreation and leisure center user fees revenues grew from $9.4 million in 1999 to $29.6 million in 2023.
In that time, the city opened four large recreation centres:
Terwillegar (2011)
Commonwealth (2012)
Meadows (2014)
Clareview (2014)
Recreation facility user fee revenues were in the $8-$10 million range from 1999 to 2010, then experienced sharp increases from 2011 to 2015.
From 2015 to 2019, fee revenues remained stable within the $29 million range, despite Edmonton experiencing relatively high levels of population growth.
Due to COVID-19, recreation facilities declined sharply in 2020 and 2021, reducing user fee revenues by roughly 67% from 2019. At $9.3 million in 2020 and $9.0 million in 2021.
Recreation facility revenue recovered to pre-pandemic levels in 2023 to $28.6 million.
From 1999 to 2010, inflation-adjusted user fee revenues per capita underwent reductions, from $26 per capita in 1999 to $15 per capita in 2010.
From 2011 to 2015, this trend showed signicant upward movement, more than doubling to $37 in 2015, with the largest single-year increases observed in 2011 (55%), 2012 (17%) and 2015 (23%). These years corresponded with the openings of major district recreation centres.
From 2016 to 2019, per-capita revenues showed year-over-year reductions, reaching $30 in 2019. There were sharp declines in per-capita revenues in 2020 ($10) and 2021 ($9) due to COVID-19 impacts, followed by a partial recovery in 2022 ($22) and 2023 ($25). In 2023, inflation-adjusted per-capita user fee revenues were 33% below the 2015 peak.
Examining recreation facility user fee pricing, we see a similar trend as with transit, where inflation-adjusted prices have undergone significant reductions in recent years.
Year-to-date 2024 (January through August) average monthly attendance reached an all-time high, at 659,000, despite no recreation facilities opening around this time. 2024 attendance levels surpass the pre-COVID-19 peak in 2018 by 29%. This significant boost in attendance can likely be attributed to the high rates of population growth in Edmonton that drove additional demand for service.
Other non-tax revenue challenges that our city saw included:
Declining Automated Enforcement Revenues
Growth Calculator Removed from Policing Grant
Our city faces significant challenges with diversifying our municipal funding sources beyond property taxes. Our key challenges include limited growth in user fees, regular caps on franchise fees, and the unpredictability of external transfers such as provincial or federal grants.
These issues are compounded by market fluctuations, inflationary pressures, and the inability to increase fees. As we continue our budget discussions we need a set of proactive financial strategies to manage operations and capital funding gaps sustainably.
