Calgary

3%, 1.5% or 0% tax hike? Council debates city budget impact on Calgarians and what services to cut

Calgary city council will have to decide whether it wants to reduce taxes, and make more cuts to city services, or maintain its planned tax increase for the coming year. 

Exact impacts of recent provincial budget funding cuts not known until January, says city

Mayor Naheed Nenshi says taking the zero per cent tax hike option would require tough decisions that will affect Calgarians. (Drew Anderson/CBC)

Calgary city council will have to decide whether it wants to reduce taxes, and make more cuts to city services, or maintain its planned tax increase for the coming year. 

Administration presented councillors with three scenarios on Tuesday:

  • A zero per cent property tax increase. 
  • A 1.5 per cent increase.
  • An already approved increase of three per cent.

The debate comes as the city continues to try to determine the exact impacts of the recent provincial budget. Administration says it will take until January to understand the full hit from those cuts. 

Even with the three per cent increase, there would be some belt-tightening at city hall due to inflation and the provincial budget. 

The 1.5% option

Under the 1.5 per cent increase scenario, the city would save $26 million, but there would be some impacts, particularly on maintenance of park land, deferral of a new fire station, reduction in the quality of property assessments, longer timelines for new community developments, less pavement maintenance and more. 

It would result in the typical single residential home paying an extra $2.60 per month. 

Maintenance of the status quo of a 3.03 per cent tax increase in 2020, would result in an increase of $5.10 per month on that same home. 

With the reduced revenue, 178 full-time jobs would be lost.

The impacts increase significantly under the zero per cent scenario, which would result in $52 million in savings and slash 236 full-time jobs (not including police staffing cuts).

The 0% option

Under the zero per cent scenario, all the impacts associated with the 1.5 per cent increase would remain and are combined with further cuts. 

With no tax increase, the police would have to cut $8.45 million from its budget due to the impacts of provincial cuts and the Alberta government taking more fine revenue for itself.

Work on improving emergency response times would be put on hold and the library would have to reduce its hours and offerings. There would be delays in new transit service, delays in tree replacements, deferred preventative maintenance on city facilities and more. 

Civic partners would also be hit. Silvera, which provides low-income seniors with housing, says it would have to close a lodge. Heritage Park says it would have to shut down programs and risk being unable to fulfil its charitable mandate. 

The political debate

Coun. Ward Sutherland says he'll be pushing for the zero per cent option and wants to see the unions that represent city workers agree to a pay freeze to mitigate job losses. 

"It's going to be a zero. There's a majority of colleagues that want it to be zero," the Ward 1 councillor said. 

"How we're going to get there? You saw the scenario today. I think there's some minor adjustments. But I also think it's part of our job as councillors to come up with suggestions rather than just say 'OK, shave another $50 million, what are you going to do about it?' We need to be a little creative."

Mayor Naheed Nenshi takes a different view, arguing that these reductions can have a profound impact on individual Calgarians. 

"So I would urge my colleagues on council to really be thoughtful about saving 25 cents [on a property tax bill] versus having a real big impact in people's lives and I think that is the conversation that we really need to have," he said, citing reduced transit service or cuts to recreational opportunities. 

He also said achieving the zero per cent target would require tough decisions.

"The biggest challenge with zero is it means a pretty big cut to the police service. There's no other way to do it. You can't rely on the other services to keep covering fo the largest service," said Nenshi. 

"So council really has to say if they're more wedded to zero or are they more wedded to protecting the police service."

Chamber reacts

The head of the Calgary Chamber of Commerce is looking for long-term solutions for business owners. The decline in property values downtown has resulted in a shift in the tax burden on business properties outside the core.

For the past three years, council has given business property owners a rebate on their taxes, but that won't happen this year.

Chamber CEO Sandip Lalli says council needs to shift some more of the tax burden from non-residential accounts to homeowners so there's real tax relief for business.

She says Calgary businesses need long-term answers to their questions on tax costs.

"You're not providing me any of that. I'm going to make my own decisions based on what you're doing here and what you're doing here is putting me in a corner to say 'Do I continue to employ people and continue with my business or do I double down and say my growth is elsewhere?'" Lalli said.

Just 1 step

The debate on Tuesday is one step in the budget process, with further debates to come on whether to shift more of the tax burden onto individuals in order to relieve businesses that have been hit hard by falling property values in the downtown core. 

On that note, however, the city says decreases in tax revenue from the core have stabilized and it's projecting the share of tax revenue from the downtown office towers to increase slightly in 2020. 

The budget figures were released on the same day as the annual citizen satisfaction survey. The survey shows residents are split on whether to cut services in order to maintain or reduce taxes (50 per cent) or to increase taxes in order to maintain or expand services (44 per cent).

Citizens will be invited to bring their views directly to council starting on Nov. 25, when there will be a public meeting on the proposed budget adjustments

About the Author

Drew Anderson is a web journalist at CBC Calgary. Like almost every journalist working today, he's won a few awards. He's also a third-generation Calgarian. You can follow him on Twitter @drewpanderson. Contact him in confidence at drew.anderson@cbc.ca. Signal contact upon request. CBC Secure Drop: www.cbc.ca/securedrop/

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