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Back  |  September 13, 2016  | 


Disclaimer: Please note that all opinions expressed here are my personal views. To keep up-to-date on City of Calgary finances, sign-up to receive my monthly e-newsletter here.

Capital Budget – Strategic investment & putting people to work

As we pass the mid-year marker, the economic numbers for the City of Calgary unfortunately continue to decline. Recorded unemployment has reached a decade high of 8.0% (you can normally add 1 ½ % to 2 ½% to the existing EI rate, i.e. - individuals who no longer collect EI and still are not employed). More than 4100 businesses have closed this year already, compared to 3500 in 2015. Housing starts are down 36% year-to-year. In January, the introduction of the Carbon Tax will add $7M to the City operating budget and will burden businesses, homeowners and renters. As well, the outcome of additional costs of the litigation with Enmax by the Province of Alberta is unknown. This will ultimately affect the City of Calgary and residents, as Enmax is owned by Calgarians.

In March of 2016, I had sent a memo to the Mayor and Council outlining how we could reach a zero tax increase for 2017 and 2018, and freeze fares on transit and recreation without any significant cuts. I truly appreciated the support of Council when they voted unanimously in June for a zero increase for 2017. As Vice Chair of Priorities and Finance, I spend time with the CFO & team and the City Manager reviewing and discussing various aspects of the operating and capital budgets. As a reminder, Council may not run a budget deficit. I encourage and challenge the provincial government to match our zero increase on the provincial side of the property tax.

It was announced that as a city we have almost $8B in capital dollars. This accumulated capital dollars came mostly from projects that were approved; however, when the projects went out for tenure the bids were significantly higher, so the projects were shelved over several consecutive years. Now that the economic environment is soft, the infrastructure costs are significantly lower and taking advantage of these lower costs is advantageous for all Calgarians.

There are several key considerations in reviewing the Capital budget and spend rates (burn rates). Are projects approved years ago still relevant today and in the near future? Should the “red flag” outdated projects be cancelled and the funds redirected to more relevant new projects? The approach to the Capital budget must be undertaken in a very strategic manner. Investment dollars spent, and return on private dollars participation, should be key considerations. Maximizing the value of the dollars spent and putting people to work is the over-arching mandate.

Additionally, how funds are allocated and invested to maximize returns to Calgarians is another key component that requires review and action. Council can contribute to reducing the negative impacts of our local economy by executing a strategic investment capital plan that maximizes value and puts people to work. The 2016 Capital Budget Recast and Other Capital Revisions report is going to Priorities and Finance Committee on September 20th and is scheduled to arrive at Council on October 3, 2016. The capital re-positioning will be part of the capital budget report going to Council the week of November 21, 2016.

Ward Sutherland​

Categories: Budget; City Finances; City Finances Blog; Councillor

This content represents the personal views and opinions of the Ward 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.​