Edmonton City Councillor Aaron Paquette has proposed an ambitious plan to address the city's persistent property tax increases, but serious questions remain about its practical implementation.
The Ed Tel Fund Expansion Proposal
Ward Dene Councillor Aaron Paquette wants to transform the city's financial approach by dramatically expanding the Ed Tel Endowment Fund. His proposal calls for growing the fund from its current $1 billion to $6 billion over the next 10 to 15 years. The generated annual interest would then be used to offset property tax increases, providing relief to Edmonton homeowners who have faced consistent tax hikes.
The Ed Tel fund originated from the 1995 sale of Edmonton Telephone to what would become Telus. Over the past 30 years, the endowment has grown from $400 million to $1 billion, representing a return that outperformed inflation by approximately 25 percent.
Historical Context and Implementation Challenges
Despite the appealing concept, the proposal faces significant hurdles. The fund would need to achieve six-fold growth in half the time it took to reach its current size. Critics note that Paquette has provided limited details about how this accelerated growth would be accomplished, acknowledging there is no magic wand to wave over the funds.
The councillor describes his concept as creating a sovereign wealth fund for Edmonton, similar to models used by resource-rich regions to manage windfalls for long-term public benefit.
Regional Tax Disparities Undermine Solution
Even if successful, the sovereign wealth fund approach may not solve Edmonton's underlying competitive challenges. The city faces significant tax disadvantages compared to surrounding municipalities, particularly for commercial and industrial properties.
Companies locating just south of Edmonton International Airport in Leduc County enjoy industrial taxes 62 percent lower than Edmonton's rates. A business with $10 million in land and buildings would save nearly $175,000 annually by choosing Leduc County over Edmonton.
The tax savings extend across the region: $146,000 in Parkland County, $136,000 in Spruce Grove and Strathcona County, and even $110,000 in St. Albert, which has the second-highest rates in the region.
For residential properties, Edmonton faces stiff competition too. While St. Albert charges higher residential taxes ($5,627 on a $500,000 home versus Edmonton's $5,087), Edmonton's rates exceed those in Leduc, Sherwood Park, Beaumont, Spruce Grove, Stony Plain, and every other community in the region.
The fundamental tax gap between Edmonton and its neighbors represents a structural challenge that even a successful sovereign wealth fund might not overcome, leaving questions about the city's long-term economic competitiveness.
