Total Debt Allowed
2015–2018 Capital Project funding
The Government of Alberta has set debt and debt servicing limits for municipalities. The City of Edmonton sets an even lower debt limit for itself.
Edmonton is currently at 44% of its debt limit set by legislation.
But debt is only one component of how we pay for projects. Of the projects the City has taken on in the past 10 years, only 32% of funds came from debt-financing; the rest came from non-debt sources.
For every $1.28 of debt the City uses to pay for projects, it uses $2.72 from non-debt revenue as well.
The Government of Alberta has established debt and debt-servicing limits for municipalities to ensure they do not overextend themselves with long-term debt. For example, the Province limits that amount the City can pay on debt servicing to 35% of revenue. The City of Edmonton City Council has an even more conservative policy that limits debt based on debt servicing costs at 22% of its revenue for total debt including utility debt and no more than 15% of the tax revenue it collects for tax supported debt.
While the City of Edmonton has increased its accumulated debt in the last ten years, it has also increased the level of investment in infrastructure. Most City projects are funded in multiple ways, not just through debt. Typically, it relies on other revenue sources and contributions from other orders of government to fully fund major infrastructure projects. In fact, of the projects the City has taken on in the last 10 years, 32% of funds have come from debt-financed projects and the other 68% has come from non-debt sources.
Through policy, Council provides guidelines to ensure that debt is used strategically and carefully. This policy takes into account the type of projects debt is to be used for, the length of the project and the financial impact of the borrowing.