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Property tax decrease in the works for Calgary taxpayers

Calgary property owners could see a tax decrease in 2021, as the city’s mid-cycle budget goes beyond council’s zero increase mandate.

City administration found the equivalent of $90.7 million in reductions across the corporation.

Once that’s applied to the initial projected 3.32 per cent property tax increase ($56 million in the original One Calgary budget) you reach a reduction equivalent to a 1.66 per cent decrease to the overall tax rate.

In last year’s budget adjustment, there was a one-time $24 million rebate. The city has found permanent funding for that increase, and that was also applied to the savings.

Overall, the changes result in a budget reduction of $4.8 million – or the equivalent of a .28 per cent decrease across all taxpayers (residential and non-residential).

To break it down, non-residential taxpayers could see a .55 per cent decrease and residential taxpayers could see a .67 per cent decrease.

Overall, for the average single-family homeowners, it could mean a monthly savings of $1.50.

Still, the city’s operating budget will increase by roughly $17 million should the current plan be approved. The 2020 adjusted Calgary budget was $4.161 billion. The adjusted 2021 Calgary budget sits at $4.178 billion.

“We have taken bold action to support Calgary’s economic recovery and COVID-19 response,” said City Manager, David Duckworth.

“We have heard Calgarians and Council and have worked incredibly hard to further reduce costs while continuing to modernize services and invest in key priorities to better serve the changing needs of Calgarians.”

Attach 16 – Property Tax Ex… by Darren Krause

Where the reductions were found

More than $90 million in reductions was found across the City of Calgary, they city said.

Of that number, $26 million was found through the city’s Solutions for Achieving Value and Excellence (SAVE) program. They came through 2,500 submissions that were whittled down to the 22 business cases.

The reductions will result in the loss of 162 full time equivalent positions at the City of Calgary. The city doesn’t know how many of the 162 will be laid off, or if they’re just eliminating vacant positions.

“None of these reductions would have been or will be easy, but we will continue to strike a careful balance between reducing costs and modernizing our approach to service delivery, while still maintaining safety, protecting the environment and providing the quality of services that Calgarians want and expect,” said City of Calgary CFO, Carla Male.

Some of the bigger reductions include the Calgary Police Service funding. That’s proposed to drop by $10 million. This was expected to fund 60 new full-time growth positions.

Others include a funding model change to the city’s waste and recycling program, saving $3.874 million. It includes the city’s outsourcing of cleaning on Calgary Transit as well, pegged at a savings of $1.4 million.

Any of these reductions will still need to be approved by council.

Attach 07a – SAVE Adjustmen… by Darren Krause

During the upcoming budget adjustment process, councillors will be able to put forward amendments that may continue to change the city tax rate further.

Initial councillor reaction to budget adjustments

Coun. Ward Sutherland said given the current economic climate, businesses are still struggling.

As council has discussed earlier this year, some non-residential properties – even with the decrease – will see a substantial property tax increase. (See above slide on properties.

In order to flatten out the residential property tax, due to the assessment system, single family homeowners got a small one time rebate.

“So why are we giving any kind of rebate at the residential level, when we have these significant increases on non residential,”Sutherland said.

CFO Male suggested another potential phased tax program.

Coun. Jeromy Farkas said he wanted to see some of the business cases that didn’t make the cut in this budget.

“I would say that this is a start. I would want to be approaching our budget with a sense of urgency that there’s much more to be done,” he said.

“And I want to have as many of those ideas that did not get into the package to be provided.”

City manager Duckworth said that most of the business cases that could be implemented in 2021 were put forward to council.

Different conversation without federal COVID help

Coun. Jeromy Farkas outside city council chambers. DARREN KRAUSE / LIVEWIRE CALGARY

Sutherland said that without federal flowthrough funds to help cities deal with the impact of COVID, we wouldn’t be able to talk about property tax cuts.

The feds provided roughly $200 million dollars to help backstop shortfalls and cover COVID-19-related costs.

“If we did not have that money, we wouldn’t be talking about what we’re talking about. We couldn’t do any reductions,” Sutherland said.

With that in mind, the Ward 1 councillor figured they could make even more budget reductions.

“You can always cut. It just depends on what the trade offs are,” Sutherland said.

Coun. Farkas said they should be reaching for a 7.6 per cent cut to the budget, but he’d be happy if they reached five per cent. He felt this was just a start.

“Well, you know, it’s an election year when council comes not just with the tax freeze, but with a little bit of reduction,” Coun. Farkas said outside council chambers Monday.

Farkas said the money needs to be found in the budget so it can be sustainable long term.

“I think we’re gonna at least need about another $90 million (in savings) to be able to get us to where we need to go. And there’s room within the budget for that,” he said.

Issue with the budget process

Coun. Jyoti Gondek raised the issue of the budget process itself.

She asked CFO Male if the city looked at historical tax revenue and then built a budget around that. Or, if they decided upon the services they wanted to provide and then taxed Calgarians based on that.

It’s the latter version, Male said.

Coun. Gondek said that they need to revisit that process in the future.

“I think at a very basic level, setting operating budgets, without having a full understanding of what we stand to collect through the market assessment system is probably the thing that has gotten us into the situation we’re in,” Gondek said.