Calgary

Potential changes to Calgary's budget to be unveiled Tuesday

City council will hear suggestions Tuesday morning on how next year's budget might be changing.

City council asks for budget scenarios but provincial budget throws a wrench into process

City council will look at scenarios for its 2020 budget on Tuesday. (Monty Kruger/CBC)

Calgary city council will hear suggestions Tuesday morning on how next year's budget might change.

Council has already approved a three per cent property tax increase for 2020. 

But earlier this year, it asked administration to present scenarios for a 1.5 per cent tax hike and a tax freeze. 

Even if council stands pat with a three per cent tax hike, Mayor Naheed Nenshi said that still results in small cuts at city hall. 

That's because that figure is still below the current rate of inflation plus population growth in Calgary.

"There's a lot we're going to have to deal with," said Nenshi.

Provincial budget means less money

Council's task was complicated by Alberta's new UCP government when its first budget was unveiled on Oct. 24.

Several provincial measures will result in less money for the city. Those are revenues already baked into the civic budget that now will not be there.

The province is cutting grants it pays to the city in lieu of property taxes. 

It's also going to take a greater share of fine revenue from traffic tickets handed out by the Calgary Police Service, resulting in less money for the police.

"We've had between $15 and 20 million dollars of cuts in the provincial budget. That equals about 1.5 per cent on the property tax right there so we've also got to find that," said Nenshi.  

The province is also increasing this year's education property tax. Council has no choice on that one. It can only pass on that increase to Calgary property owners.

But there's still another budgetary challenge.

Tax burden shift to be addressed

Council will continue to wrestle with dealing with big property tax hikes for several thousand business property owners.

Due to declining land assessments downtown during the economic downturn, non-residential property owners outside the core have seen large increases in their taxes.

Council has blunted those increases over the past three years by reaching into its rainy day fund and offering rebates.

This year, it used $70 million from the fiscal stability reserve fund and found $60 million in spending cuts to produce a 10 per cent tax cut for business properties.

Besides resulting in cuts to city services like police, fire and Calgary Transit, more than 200 city jobs were cut including 115 through layoffs.

However, the mayor is warning there is little capacity for more tax rebates for businesses in 2020.

"[Council] spent all of the money on the one-time rebates that I had hoped to spread out over two years in one year and now, there's no money left in the kitty. So even the loss of that rebate is going to hit some businesses hard," said Nenshi.

Council is expected to look at a possible shift in the tax burden between residential and non-residential accounts, trying to work toward a 50-50 balance.

Tax hike fatigue

It all potentially increases the financial pressure on homeowners at a time when there is little appetite for tax hikes.

Several councillors have signalled they want city unions to give up negotiated salary increases for 2020 to help city hall deal with its financial challenges.

The potential budget adjustments will be put before council on Tuesday.

Calgarians will have a chance to speak to city council about the changes during a public hearing on Nov. 25.

Council will then vote on budget adjustments during the final week of November.

However, combined property tax rates won't be finalized until after the next provincial budget is presented next spring.

One thing Nenshi is hoping for is that once the dust settles later this month, the amended budget plan for 2020 is left alone.

"My city council colleagues frankly are going to have to stick with their budget this time. I certainly would not want to see a repeat of last year where we passed a four year and then panicked and threw it out."

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