Please note that all opinions expressed here are my personal views.
City of Calgary Tax Crisis - Danger or Opportunity?
When you are in a crisis, the situation can be approached from two different perspectives - Panic (Danger Reaction) or Pragmatic (Solution-based Opportunity). The Danger approach tends to be more emotionally based. It lacks in-depth research and understanding of the City's finance structure, throw politics in the mix and it is much easier to use "sound bites" to address the topic.
We have an opportunity to look at things pragmatically - utilizing various financial buckets (reserves, contingency funds, etc.) such as Pay as you go, current dedicated tax room allocations, and temporarily reallocating them. The Fiscal Stability Reserve could be used in a combination or substituted for one time or fill the gap in reserves, however, one time payments lead to tax room showing up the next year. We need to focus on continued improvements, etc. and yes, even some minor cuts ( which would be the last resort). The budget differences between 2017 and 2018 are significant and now the gap needs to be addressed.
It is important to think further ahead than just 2017. These decisions may have impact on others years and all influences must be reviewed. As mentioned in my last blog, labour contracts (4 years duration) renew in 2018. This is a critical component of the property tax increase (currently 3%).
I talked to hundreds of people in the past few months who have been either laid off or forced into reduced work weeks or straight wage decreases (up to 15%). Our four year labour contracts have been very generous (+3.1% Average per year) in light of the current economic environment. I appreciate that these contracts were agreed upon in early 2013 when the economy was very strong. From my perspective, the contracts must be honoured with no demands for roll backs or layoffs; however, in moving forward we need understanding and cooperation to move taxes lower. This is for the sake of the Corporation and all Calgarians.
I have been criticized by the unions as being "political" about discussing wages. This is the furthest thing from the truth - it is simply "math and finances", which is my job. We cannot afford to continually increase our operating budget at the same pace as we have over the last 6 years. The cumulative effect of 2010 (three year average of 9.8% increase in property tax) has surfaced.
The last two years of Zero Base Reviews have found over $56M in savings/efficiencies. This is only five departments so far, but we will continue to execute these reviews in various other departments over the years to come. City Administration understands the current economic environment and continues to find savings and support efficiencies in its departments. They have found over $86M in savings the last two years and will not stop there. Are they at the bone? No, the ZBRs still have usefulness and should be continued. Additionally, 470 positions are still being held vacant over the last two years.
We also need to review and consider what areas of business the City should be in. An example is waste collection - should it be 50% private and 50% City ? We need to create a competitive environment which benefits all parties. Golf courses are another area that have been a financial drain. Should we look at different delivery models? We currently contract out the operations of our recreation centres with good results. I believe there are several opportunities to contract out, and other areas that make sense to keep in-house.
I believe it's important to have a balance between government and private services. This is not an argument about choosing between unions or private enterprise as sole providers. Both parties must deliver services at a strong level and at a competitive cost. This is simple - the City's job is to deliver good, consistent service at the best price. Our Customers are the residents of Calgary, businesses, various industries, and visitors.
Our businesses are carrying a heavy burden made up of taxes, CPP increases, tax increases and an upcoming Carbon Tax. We will address our responsibility at the City level by reducing our taxes in the upcoming tax year and implementing our infrastructure program; however, we do not have the resources to solve all the businesses's economic issues. Unfortunately, more businesses will go under in the near future. Businesses should be challenging the other levels of government regarding the policies that they consider counter-productive.
Council has some very serious considerations in many different areas of the Corporation this upcoming strategic meeting. On June 27th, Administration will bring forward an additional cut to approximately 1.5% or so. I am confident Council can show leadership and achieve the zero tax target without any significant cuts to services. I intend to continue championing this reduction as I have the last three years. For others to imply it’s because of an election year is insincere; my track record for reduction has been consistent from day one. Residents and businesses need to “catch their breath” and we have the opportunity to deliver.
We are at a critical "Crisis Point on Taxes" and I see great opportunity!
Priorities & Finance
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This content represents the personal views and opinions of the Councillor and should not be taken as a statement of policy of The City of Calgary. The inclusion of any external content does not imply endorsement by The City of Calgary.