2023 Budget Adjustments

The City’s budget was approved this week with a 5.7% property tax increase, and a property tax shift that brings the increase to 7.8%. As a result of this decision, a typical residential home assessed at $610,000 will see an increase in property taxes of approximately $16/month.

Other major cities are facing the same pressures as Calgary with proposed increases in Vancouver at 7.6%, Edmonton at 7% and Saskatoon at 7.1%. More locally, Airdrie is facing a proposed increase of 9.7% while Okotoks is looking at about 5%.

While inflation is a significant contributing factor, it’s not the whole picture. Societal challenges have never been more complex and it’s straining city services, as well as affecting our quality of life. Approving property tax increases is never popular, so let me explain the story behind the numbers.

Our city budget was focused in the following areas:

1)  Affordable Housing

Calgary is seeing record population growth that is driving up the cost of market housing and putting significant pressure on non-market housing, when waitlists are already long. Governments have spent two decades underfunding affordable housing. When you combine this underinvestment with the increase in addictions and mental health issues, we’re seeing more and more people on the street with no place to go. Waitlists for treatment and a safe place to call home have never been longer and I’m hearing concerns from residents about the state of safety in our city. We cannot allow our downtown and transit system to fall into shambles because we’re not addressing the root of the issue.

No amount of enforcement can fix this problem and we must address addictions & the lack of non-market housing if we hope to see change. The City’s investment in Affordable Housing is also allowing us to leverage $228.5 million dollars from the Federal Government’s Housing Accelerator Fund. It’s important that we get tax dollars sent to Ottawa invested back into Calgary, and I’m pleased that we’ve been able to do that.

2)  Public Safety

While it’s critical that we get to the root cause of the social disorder we’re seeing in Calgary with investment in Affordable Housing, we must address the short-term reality as well. This budget included funding for 65 peace officers who will focus on keeping the transit system safe. Even if you never ride transit, these are smart investments that free up police to focus on more serious crimes. This is critical, as we’ve seen a significant rise in protest activity and other concerns that demand police attention. This budget also includes money for permanent front line fire positions and a medical response unit. In an effort to lower your taxes, the previous council cut the fire department’s medical response units, all while call volumes for things like overdoses grew by 185%.

This budget also includes money to fix buildings in poor and critical condition, which is another example of how deferring maintenance to save money in the short term always comes back around. There are also funds for road repaving. In yet another bid to save money by previous leaders, road maintenance was deferred. The average Canadian municipality has 61% of its roads in good or very good condition; in Calgary, that number is only 41%. If we continue to put off the repairs, tens of millions of dollars of cost becomes hundreds of millions.

3)  Transit

North Calgary residents are aware that the previous council decided to proceed with the first phase of the Green Line, which is going South. I ran on a platform to ensure that the North portion of the line is advanced and prioritized. In this budget, I was able to secure funding to start land acquisition for the North part of the leg. Without this investment, there will be no Green Line to the North, but even with it, it’s going to take a long time for Light Rail Transit to be delivered here. This is why ensuring that funding was secured for the Max 301 North BRT improvements was essential. The Max 301 will offer better transit service with heated shelters, priority queue jumps and early design work that will enable the future Green Line.

As a city that will reach 2 million people in my lifetime, this investment in Transit is critical, even if you never plan to ride a bus or the LRT. Every year, more and more cars hit the road and commutes become longer for drivers. If those who wish to take transit have reliable service, it means a better driving experience for those who must or choose to drive.

Now let’s talk about the Tax Shift…

Every Canadian city must decide how much of the property tax share is paid for by residential properties and how much is paid for by non-residential properties. In virtually every city in Canada, the expectation is that businesses pay more than residents—it’s typical that a business in Canada pays about 1-3x the amount of tax as a resident. In Calgary, that ratio is much higher and climbing—a typical business here pays 4.26x more taxes than a typical resident.

So why change it?

While there are economic reasons why you don’t want to see this ratio get too high (e.g., businesses may choose to locate elsewhere), the real answer is that the City cannot legally charge businesses 5x more taxes than we charge residents. This has been an issue since the economic downturn when oil & gas companies left the downtown. Elected leaders have been reluctant to do the shift because it’s unpopular—residents vote, businesses don’t. In my opinion—we can’t make this about politics.

Can we fix the problem without adjusting the share?

The short answer is no. Some people will say that the solution is simply to cut spending overall, but the ratio laws exist irrespective of what your budget is. We could cut the City’s budget in half, or double it, and the share issue will persist.

I believe that it’s my job as a City Councillor to be a responsible governor. I’m here to serve the public and not ignore problems that we know how to fix. There’s always an incentive for politicians to kick issues down the road, but this issue has been kicked as far as it could be. It would be nice to kick it further, but we’re too close to the legislated maximum (see Table 1).

There is a wealth of analysis by experts that Calgary should gradually adjust the tax share (you can read more here), and that’s what I’m committed to doing. Business advocates think we should move faster (adjust by 2%), but I don’t believe that’s reasonable.

Final Thoughts

Overall, this was a very difficult budget. The fact that previous leaders have refused to adequately address the tax ratio has led us to this place. Previous decisions to cut capital maintenance pushes us to make these decisions today. At some point, we have to make the decision to reinvest in the collective good, especially when we’re seeing record migration to Calgary.

It’s important that we hold the City’s Administration to account for their service delivery and they continue to score well in this regard. Despite the challenges we’re facing, the City is still delivering its services for better value than many of its municipal peers (See Figure 4).