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Back  |  June 13, 2016  | 


Just the Facts on our Taxes (let’s get rid of the Rhetoric)

It’s interesting to note, given the significant recent backlash and press coverage, Zero tax increases now seem acceptable to many of the Council members. When I started as Vice Chair of Priorities and Finance, I made it my mission to dive into “the weeds” of the City’s corporate finances and structure. I wanted to be sure that I understood the various “buckets”, allocations and accounting practices that were in place. In addition, I invested significant time analyzing the Zero Base Review process and examining the gaps in the process of the review system (benchmarking performance). I truly believed then, as I still do now, that our taxes have been too high for years.

The previous 2010 Council (of whom 10 members are still in the current 2013 Council) passed tax increases to a high of 13% and an average of 9.8%. Additionally, there were two significant opportunities to decide what to do with tax room ($52M in Transit and $42M in Recreation). These were voted on by Council and went to projects, rather than being used to lower the base tax rate. 

Defaults on credit cards and car loans are rising; this is normally a forecast of mortgage default next. Unfortunately, it is recognized that the Calgary economy has not reached the bottom. We will see more businesses go under and unemployment continue to climb in Calgary. (Note - some people will migrate to Ft. McMurray for jobs in the recovery process and this will affect the numbers). The addition of the Carbon Tax, corporate tax, and potential $15/hour minimum wage is counter-productive and only serves to accelerate even more small businesses going under.

The current Council’s tax increase average is 4.24% (which is half of the last Council’s average increase), and which is still too high under the circumstances. Although this has been the lowest tax increase in over 11 years, we can go lower. After the recent capital budget in March, I sent out an email the same month to all of my Council peers, with detailed information on our major cost factors and various options on how to get to zero. As I continue to go through the numbers with other Councillors, there have been several additional good ideas on how to reduce taxes without any significant impact in services. We have room in Pay As You Go (the Transit room). Also in 2018, $10M in tax room will become available.

We can get to zero WITHOUT significant impacts to service. We do not have to close libraries, nor reduce police, etc. When you throw these types of scenarios out to the public, it does become political (and unfortunately, it is often without factual basis). We need to be firm in our 2018 negotiations, because it will be a 4 year contract. The breakdown of the Current 4 year contract is as follows: 2014-1.8%, 2015-3.2%, 2016-3.5%, 2017-4.0%, with the Average being 3.1%. (Note - out of the 3.5% Tax increase in 2016, 3.04% was for contract labour increases).

We have an obligation to listen to our citizens and deliver the best services at the lowest cost possible. We also need to understand the long term impacts of our decisions. The other two levels of governments are increasing taxes and adding fees, and do not support an environment of growth. We will need to address the Carbon Tax add-on of $7M to our operating budget in 2017. Council has an opportunity to reduce taxes and provide a “Seed Multiplier” with our capital dollars. This means providing various modes of financial investments (infrastructure, etc.) that will create more (multiplier) investment dollars from private industry. This has two significant benefits to Calgarians – 1). smart direct job creation and 2). catching up on overdue infrastructure at a lower cost. It’s important to note, we will NOT be borrowing any money on our capital fund budget.

We need to work together to minimize impacts, and we do not need to fear monger. This is Finance budgeting, which is operations and capital; they are both intertwined and have implications in the future in terms of taxes. 

Let’s get rid of the rhetoric.

Get engaged, let your Councillor know your point of view.

Ward Sutherland

Vice Chair

Priorities and Finance

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Categories: Budget; City Finances; City Finances Blog

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.​