Calgary council approves $60M in cuts to help ease commercial property taxes

Calgary council unanimously voted to cut $60 million from the city's budget and use $71 million from reserve funds in an emergency bid to lower commercial property taxes, hours after hundreds of business owners rallied outside city hall demanding relief.

Cuts and rebates will be used to trim non-residential property tax by 10%

A rally for tax relief for businesses in front of City Hall on Monday attracted hundreds of people. (CBC)

Calgary council unanimously voted to cut $60 million from the city's budget and use $71 million from reserve funds in an emergency bid to lower commercial property taxes, hours after hundreds of business owners rallied outside city hall demanding relief.

More than half of business property owners in the city had been looking at tax hikes of more than 10 per cent this year, due in large part to the sharp decline in taxes coming from the downtown core, where office vacancies remain high.

On Monday, the 15 councillors unanimously passed a plan put forward by Coun. Shane Keating.

"The combined amount of $130.9 million (one time) will be used to create a minimum 10 per cent reduction in non-residential municipal property taxes from 2018 to 2019," the motion says.

Keating's motion instructs administration to explore eliminating programs, services or staff to achieve the budget cut.

The motion was a collaborative effort signed by nine other councillors: Ward Sutherland, Diane Colley-Urquhart, Evan Woolley, George Chahal, Jeff Davison, Peter Demong, Joe Magliocca, Sean Chu and Gian-Carlo Carra.

"We can ensure that Calgary remains a city that people want to come to work and play," said Keating as he made his final pitch in favour of the plan, which council debated for more than five hours after starting the meeting at 8 a.m. 

On the weekend, Mayor Naheed Nenshi had said he felt the plan was too aggressive for "marginal improvements" and expressed concern about voting for cuts without knowing what they would be. However, Nenshi voted to support an amended plan after Monday's debate.

In just three years, the value of Calgary's downtown office towers dropped by more than $12 billion, plunging city tax revenues by $300 million. 

The city has already dipped into its savings to help ease the burden, taking $86 million over the past two years to cap the business property tax increase at five per cent. 

But businesses say that's a short-term solution. They'd like to see a longer term strategy to ease the stress and anxiety, as a rise in downtown office values appears years away.

Rally outside city hall before the debate

Earlier Monday, hundreds of business owners and their supporters packed the plaza outside of city hall to rally demanding support. It was organized by a group called I Heart YYC Small Biz.

Business owners rally in front of Calgary City Hall demanding action to address rising property tax bills outside the core as office vacancies downtown shift the tax burden outward. (Reid Southwick/CBC)

Later, a long line of those business owners queued to make statements in the council meeting.

"I'm tired of giving what I don't have," one business owner, Bob Pelzer, told council. "I think the major issue is a spending problem.

"We don't need a handout. We need a responsible municipal government," he added.

Another entrepreneur, Michael Evans, told council it was time to face the new reality.

"You need to be honest to Calgarians and tell them the truth. This is a spending problem," he said.

"Yes, there are going to be job cuts but your job is not to be the employer of last resort."

Woolley said he believes the plan to cut $60 million is actually just a starting point.

"I think we need to really, really dig deep in the coming months," the councillor said.

Amendments debated

Several amendments were also debated, mostly proposed by Coun. Jeromy Farkas. 

Farkas successfully advocated for an amendment to have council lead by example and reduce their office expense account budgets by 15 per cent.

Keating called the idea "half-baked, phoney baloney," estimating it might save a total of $7,000 per year. However, he voted for it anyway, and the amendment passed unanimously.

Another amendment proposed by Farkas would have seen city council's pension plan — which he said is the most generous in the country — temporarily frozen, and council pay cut by 7.5 per cent.

"We have a moral obligation to lead by example," he said.  "I am urging you to take a stand on this, one way or another."

Woolley argued against the amendment, noting that council had already voted to put the matter before the audit committee.

Carra denounced the motion proposed by Farkas as "weaponized misinformation" and "political showmanship." He said elected officials shouldn't be tasked with determining their own compensation, a sentiment echoed by Nenshi.

"Why aren't we talking about what's important now," said Sutherland.

Council rejected the amendment by a margin of 12 to three.

Details still to come

Details on the spending cuts will be announced next month.

Colley-Urquhart said it's unfortunate that council finds itself having to make big cuts in short period of time, but the situation is urgent.

"We've got to stop this spiral to the bottom," she said.

She said the plan isn't likely perfect but she said it's an important and necessary start.

The affected tax bills would see a downward adjustment no later than Aug. 1 despite property taxes having already been mailed out for 2019.