Calgary approves $1.8B in capital spending for 2017, using reserves to blunt tax hike

In response to the economic downturn, the city has already ramped up capital spending by about 30 per cent over last year and plans to continue that trend next year, with another $1.8 billion budgeted for infrastructure projects in a bid to boost employment.

One-time draw from rainy-day fund allows for effective 0% tax increase overall, although your mileage may vary

Renovation of the 8th Street S.W. underpass in downtown Calgary is nearing completion. The city will spend nearly $1.6 billion on capital projects in 2016, up from an annual average of about $1.2 billion in the previous five years. In 2017, the capital budget is $1.8 billion. (Robson Fletcher/CBC)

If you've taken the Eighth Street underpass in downtown Calgary lately, you'll likely have noticed the curvilinear LED message board that now snakes its way above the roadway.

The fancy new sign is part of an $8.8-million renovation of the once-dilapidated route beneath the CP Rail line, a project that represents about 0.6 per cent of Calgary's roughly $1.6 billion capital budget for 2016.

The city has ramped up infrastructure spending by about 30 per cent over the year before in response to the economic downturn and plans to continue that trend next year.

The capital budget for 2017 is projected to grow another $200 million to total $1.8 billion, according to a financial plan approved by council on Monday.

"I think council and administration can be very proud of this budget and I think Calgarians will like it," Mayor Naheed Nenshi said.

The boosted capital spending is a deliberate move that a deputy city manager described as "increasing the velocity of capital" in order to meet Calgary's growing infrastructure needs while also stimulating the local economy.

"The economic benefits are direct and indirect," Brad Stevens told the mayor and city councillors.

"In 2016, this capital investment will support approximately 12,000 jobs in the Calgary region."

At the same time, the city has trimmed its operating budget by a modest amount, finding ways to reduce spending and be more efficient in certain departments, without reducing services.

"We are improving efficiencies," said Coun. Andre Chabot.

"We're looking at about a total of $183 million that we've cut out of the budget."

Coun. Andre Chabot represents Ward 10 in eastern Calgary. (CBC)

The result is a proposed tax increase of 1.5 per cent in 2017, to be offset by a one-time, $22.5-million draw from city reserve funds so that the actual change to the total property tax haul is zero per cent.

Since the draw on reserves is for 2017 only, that 1.5 per cent increase to the city's structural budget will be noticed on the 2018 property tax bills, on top of any further increase the city approves in its annual budget process a year from now.

The actual amount of tax each property owner pays this year will also depend on individual property assessments.

Those whose properties change in value more than the average will pay more, while those whose property values change less than the average will pay less.

Big variance in business tax bills

City staff have noted that, because of the major reduction in the assessed value of downtown properties — where office vacancy rates have reached as high as 25 per cent — businesses in that area are likely to see the largest reductions in their taxes while those outside the city centre will likely see tax increases.

Amber Ruddy, from the Canadian Federation for Independent Business, called on city council to offer some relief to those businesses in the suburbs and elsewhere that will be facing the biggest hikes in their actual tax bills.

"Calgarians welcome and applaud the move to freeze the taxes in 2017 and urge the council to ensure this is available for all business across the city, no matter where they're located," she said.

Chabot said it's something council will consider.

"We'll have to look at how they're going to be impacted, which ones are going to be the most impacted, and how we can help some of those businesses actually stay in business," he said.

As it stands, the city estimates that 21 per cent of the city's 26,760 business accounts will see a tax decrease in 2017, while 79 per cent will see an increase.

It also estimates 41 per cent of businesses should stay within plus or minus 10 per cent of the previous year's tax bill.

Other members of the public who spoke to council Monday called on the city to cut spending even further in order to reduce property taxes, but Nenshi said most of the feedback the city has gathered to date has not been in favour of such a move.

"People have really told us loud and clear, while they want government to be efficient and as cost-effective as possible, they don't want us to add to the problem," he said. "They don't want us to throw out people onto the street and really cut services really significantly."

Despite approving the budget already, council will resume their meeting Tuesday for further discussions with leaders of city departments on their spending plans, and to talk about how the city might assist businesses facing the largest increases on their property tax bills.


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