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Action Plan: 2018 Adjustments

Approved 2018 Adjustments

The City’s Action Plan describes how The City will respond to citizen’s needs over 2015-2018. It was developed and approved in 2014, and outlines our commitment to make life better every day for Calgarians.

The approved 2018 Adjustments focus on the operating budget and the need to realign operating expenses with revenues given the new economic reality. Information and recommendations on The City’s reserves at the end of 2016 and the results of the 2017 Triennial Reserves Review have also been included to provide a complete picture of The City’s finances.

Background context

$325M Cost Savings

Between 2015 and the beginning of 2017, Administration found $325 million in
cost savings
.

  • The overall financial goal is to maintain financial sustainability and resilience to ensure The City can continue to deliver the level and types of services at acceptable levels of taxation and fees. This means balancing revenue and expenditures so The City has the capacity to recover from shocks while continuing to adapt and grow.
  • After Action Plan was approved the Calgary economy began to show signs of a significant downturn. The unemployment rate doubled and population growth slowed. While the economy has now begun to recover, the effects of the downturn are still being felt. This has made the 4.7% tax rate increase for 2018 approved in Action Plan, no longer acceptable.
  • The need to reduce the 2018 tax rate increase along with revenue challenges stemming from the current economic environment, led Administration to identify a projected 2018 tax supported operating budget gap of $170 million, which was later reduced to $146 million.
  • Administration has worked collectively to find solutions to close the budget gap through a combination of cost savings and service reductions using a least harm approach to help reduce the impact on citizens.

Approval of the 2018 adjustments allowed for the closure of the $146 million operating budget gap through a combination of cost savings and service reductions based on the least harm approach.

Key elements of the approved 2018 Adjustments

  • Reduction to the previously approved 2018 municipal property tax rate increase from 4.7 per cent to 0.9 per cent for property owners.
  • $20.8 million for Calgary Police Service (CPS) for the addition of 55 new members to address growing demands, additional human resources and to fund body-worn cameras, as well as to restore the reductions that had been recommended.
  • An additional $4 million from the Fiscal Stability Reserve to fund the low income transit pass for Calgarians in need in 2018.
  • $4 million to restore the recommended reductions to Transit service hours and to invest in additional services to optimize the system.
  • Restoration of $1.4 million in funding for Civic Partners.
  • $3.0 million approved from the Fiscal Stability Reserve to Community Services for safe communities, youth and low income programs and crime prevention.
  • $23.7 million in 2017 tax room dedicated to fund Green Line financing costs for 27 years ending in 2044.
  • Reduction to previously approved 2018 basic sanitary tipping fees from $119 to $113 per tonne and Planning & Development fees, to reduce the burden on Calgary businesses.
  • $1.7 billion for capital investment in Calgary infrastructure.

Council also directed Administration to determine the cost of extending the Municipal Non-residential Phased Tax Program (PTP) to help Calgary non-residential property owners, and report back to Council in the first quarter of 2018 with a recommendation on either extending the PTP or finding a more efficient way to provide tax relief to businesses through the use of up to $45 million in funding from the Fiscal Stability Reserve.

The 2018 property tax rate will be finalized by Council after the Government of Alberta approves its budget and 2018 provincial property tax requisition in the spring.

The approved operating budget will bring the 2018 property tax rate down to 0.9 per cent from the previously approved 4.7 per cent tax rate increase. This translates into a property tax increase of $1.35 per month or $16.00 annually for the average homeowner with a single residential property valued at $460,000.

In addition to the approved tax rate increase at 0.9 per cent, taxpayers will see an additional 2.9 per cent increase on the municipal portion of their 2018 property tax bill (or approximately $4.35 per month for the average homeowner), for a combined impact of $5.70. This is the result of 2.9 per cent in one-time rebates that Council approved in 2017, which effectively sheltered property owners from the 2017 increase by deferring the impact for one year.

Action Plan 2018 Adjustments Report C2017-1123

Property tax breakdown

Do you want to know how your property tax dollars are being spent?

Go to the tax breakdown tool to see how your property tax dollars are invested in City services that Calgarians rely on every day.

Timelines and next steps

  • The 2016 Report on Reserves and Long Term Liabilities and the Recommendations from the 2017 Triennial Reserves Report will go to the next meeting of the Priorities and Finance Committee on December 5, 2017, for information and approval.
  • Administration will report back to Council by Q1 2018 with a recommendation on extending the Municipal Phased Tax Program or a more efficient way to provide tax relief to businesses.
  • Administration will report back to Council by Q1 2018 with a strategy for the use of the $3 million in one-time funding for Community Services for safe communities, youth and low income programs and crime prevention.
  • The 2018 property tax rate will be finalized by Council after the Government of Alberta approves its budget and 2018 provincial property tax requisition in the spring.