Edmonton City Hall.David Bloom / Postmedia

By GRAHAM HICKS

It’s one thing for politicians to defend tax increases as a necessary evil, to fund services being demanded by the citizenry.

But then there’s a reality called the free market.

Invisible political boundaries surround the City of Edmonton.

Step across that boundary into Sturgeon, Strathcona, Leduc or Parkland counties. Magically, industrial land prices drop by a half or more.  Ongoing business property taxes check in at 50% less than in Edmonton’s industrial parks.

When existing companies expand or modernize, they are moving out of Edmonton to the major industrial parks in municipalities surrounding  the city — the Nisku and Leduc business parks, Parkland’s massive Acheson business park butting up against the city’s western boundary, Strathcona and Sturgeon counties for heavy industry.

Last year, needing to expand, Ford’s Western Canadian distribution centre left its building at 116 Avenue and 181 Street to relocate in the Leduc Business Park.

In recent years, United Rentals, Strongco, Powell Canada, Western Star Trucks and Navistar Canada have re-located to Acheson.

When Champion Pet Foods decided to expand beyond its Morinville location, the company chose Acheson, not an Edmonton industrial park, in which to re-locate.

Spokespeople for most of these companies won’t say it out loud – most have on-going business relationships with the City of Edmonton – but business property taxes have been a key factor in decisions to move out of, or not move in, the city itself.

But, hey, says Mayor Don Iveson, the city has been growing. New services and infrastructure have to be paid for. We can’t ignore quality of life – recreation centres have to be built, the LRT expanded, top-quality bike lanes built.

We can’t drop business tax rates, says city council, aghast at the idea. We need the money!

But as the new Prosperity Edmonton advocacy group so clearly points out, there’s a tipping point.

Business taxes have doubled in the past 10 years. Regulatory costs keep piling up. The permitting process is delayed for years, pending yet one more  “community consultation”. Maybe this was tolerable in the boom years, when money fell off trees. But many businesses today are barely surviving.

It’s much cheaper and faster, just as clean, green and safe for businesses to move outside the city’s boundaries.  For the same reasons, residential land developers are looking to the region – land development in the city is just too expensive.

Prosperity Edmonton is not ad hoc. It’s an informal alliance of real-estate developers, BOMA –  the Building Owners and Managers Association, the Chamber of Commerce and other business organizations. This tax revolt has long been brewing.

Prosperity Edmonton is advocating for a tax freeze in the upcoming city budget, not the 2.7% increase Mayor Iveson believes necessary.

While Prosperity Edmonton is telling city council to stop spending, nobody’s advancing  cost-cutting solutions. The Chamber of Commerce, says President Janet Riopel, awaits a report from its municipal budget task force before making suggestions to restrain civic spending.

City managers are trimming here and there, but cutting $1,000 out of the pencil bill does nothing meaningful.

For major savings, let’s state the obvious:

  • A long-term plan to lower industrial and commercial property taxes to competitive levels
  • Speeding up the permitting/regulatory process to compete with other municipalities.
  • Slowing down, defering, or canceling instructure projects that, while useful, are not crucial, i.e. West End LRT, Yellowhead Trail upgrades, bike lane expansion, the Lewis Estate Recreation Centre. Federal and provincial cost-sharing will still be around 10 years hence.
  • Turn over the Blatchford Field “of Dreams” development to the private sector and ease its regulatory/extreme-environmental requirements.
  • Leave Northlands Park and the Coliseum alone until the private sector is prepared to take on the development risk.
  • Cut city council and city manager salaries by 5%, then impose wage freezes/cutbacks on all city employees and contractors.

We’re back to the paradox of government spending:  No government reins in its spending and borrowing until confronted by a true financial crisis. By then it’s too late. But, somehow, austerity measures once again right the ship. Government starts spending and the cycle starts anew.

Iveson’s council won’t seriously cut city hall spending because the situation is not yet a crisis, despite the fact the city is hemorrhaging business tax dollars because it can’t, or won’t, compete with neighbouring municipalities.