There’s been some debate in Calgary over last November’s approved budget, and with it, more than $171 million in additional spending.

With the increase in the cost for services, and a proposed 7.8 property tax increase for residential property, questions have been raised around the hundreds of millions in “favourable variance” — a.k.a. surplus — and how that was being used.

According to the City of Calgary’s budget documents, the city was anticipating a $100 million operating budget surplus for 2023.

They also expected local access fees and franchise fees to yield $165 million in “favourable variance.” (Local Access Fees have been discussed recently, given the substantial increase.)

Ward 1 Coun. Sonya Sharp has been quite vocal since the approval of the budget last November, saying that when you have such a large surpluses there shouldn’t be a need for such a dramatic property tax increase.

“Let’s put it this way: we used $100 million surplus for those little items where you could have used the 100-million-dollar surplus to pay for the big-ticket items,” she said on Nov. 28.  

“We could have done all the priority things that we needed to do without increasing the taxes.”

In the budget overview provided last November, the city described how the surplus money was being allocated.

In early February, a group of councillors attempted to reopen the budget to squeeze $23 million from it to cover the cost of the one per cent tax shift. That effort was defeated. Coun. Sharp once again pointed out the substantial surpluses.

At that time, Ward 7 Coun. Terry Wong also brought up the additional cash.

 “You have to remember when we took about $100 million of surpluses from last year, and $165 million of local access fee surpluses, that was cast at three quarters into the year.”

“We’ve got another quarter coming up, and who’s to say there wasn’t a little more savings here that can be realized.”

Keeping the already proposed increase

The four-year budget, approved in November 2022, already prescribed a 3.4 per cent property tax increase for 2024. Councillors had talked about, but postponed, a decision on the tax shift from non-residential property owners to residential.  So, that hadn’t yet been fully contemplated.

The additional investments that still needed to be tax supported ($57 million) tacked on an additional 2.4 per cent. Add in the tax shift and you get your 7.8 per cent for residential property owners.

(Note: tax-supported costs are those that will be recurring annually and need to be included in the annual base budget amount for the City of Calgary.)

The question that’s being asked is, why not use the surpluses to fund the ongoing costs, and limit the property tax increase?

The City of Calgary’s response was that one-time were not a solution to address reoccurring costs the city incurs, and would likely lead to higher taxes in later years.

“Using a one-time funding source such as the positive operating variance to address recurring ongoing costs that are currently funded by property tax isn’t sustainable,” read a city response via email.

“If the one-time positive operating variance was used to fund the budget, thereby reducing the property tax required this year, it would compound the tax increase needed to sustain City services in the following year, as the recurring ongoing costs would still need a funding source.”

It would also mean that the other items would either have to be funded through reserves or they would have to be eliminated from the budget.

The City also said that if they continued to incorporate the positive variances into the budget through recent experience and expected trends, it “reduces the likelihood of a positive operating variance in 2024 from these sources,” the city said.

Council committed the one-time operating variance dollars to escalating capital spending requirements, the city added.

Investing in better services: Mayor Gondek

Calgary Mayor Jyoti Gondek, in an interview for the LWC-member podcast the Mayor and Me, said that there are 60 people per day moving to Calgary.

She said they spent 10 months in 2023, through regular Executive Committee closed-session meetings, hammering out priorities for the 2024 budget. That group looked at where saving could be achieved, where the revenue opportunities were, and how they could leverage money they expected from investment income, local access fees and other areas.

“We said, we are going to allocate the predicted revenue towards these things, and so if it was revenue that was sustainable, and comes in regularly, like property tax, we determined what the budget would be,” Mayor Gondek said.

“When it was things that we call one time – the money that’s coming in from other revenue sources – we figured out where it would go, largely in capital.

“We have to invest in better services. That’s why the decision was made.”

It comes down to priorities, the mayor said. They identified the need for better transit experience, better public safety and housing.

That’s reflected in the City’s 2023 annual fall survey, where homelessness, poverty and affordable housing topped the list of civic issues for the first time in the 15-year history of the survey.  Transit and public safety are top priorities, too.

However, in the same survey, there was a 10 per cent drop (from 55 to 45 per cent) in the number of people willing to increase taxes – at all – to maintain or expand city services.  On the flip side, there were 45 per cent (up from 39  per cent) who wanted to see taxes cut.

Here’s more on how the new investments would be funded.