Council facing crucial choice: tax hikes or service cuts

Calgarians could see their property taxes increase by more than three per cent annually in the next four-year budget, or face cuts to municipal services as the city struggles to balance the books.

Last April, council approved a potential tax hike in 2019 that would amount to a $49 to $64 annual increase for the average homeowner; subsequent tax hikes of between 2.5 and three per cent between 2020 and 2022 were also approved. But city administration said Wednesday it won’t be able to meet all the priorities identified by council for the next four years under the proposed tax rates.

“It actually means service cuts,” Mayor Naheed Nenshi said Wednesday. “It means that we can’t invest in the things that we want to invest in and, on the capital side, it means we can’t build the things that people are asking us to build.”

Among the things putting pressure on municipal budgets is a recent council decision to significantly increase spending on snow and ice clearing; Nenshi said a boost to snow clearing could require an increase in property taxes of up to two per cent annually.

Putting further pressure on municipal books is an estimated $4.5 billion in unfunded capital projects that come as the Alberta government has dialed back municipal grants and capital expenditures; the $4.5-billion figure did not include spending estimates related to hosting the 2026 Olympics.

Nenshi said polls show Calgarians support increased spending in areas such as transit and snow removal.

“In this particular case, because council has signalled that it actually wants to invest in these things, they’ve gotta figure out a way to pay for it,” he said.

Some councillors questioned what the city’s current fiscal outlook should mean for Calgary’s pursuit of a bid for the 2026 Olympics.

“It really pains a lot of people that I hear from that we’re still considering pursuing an Olympic bid,” said Coun. Jeromy Farkas.

“Focus on the need-to-haves and put a pause on the nice-to-haves until Calgarians’ ability to pay recovers with the economy.”

But Nenshi said Wednesday that he believed the right funding deal from other orders of government for hosting another Olympics could actually ease pressure on the city’s four-year budget.

“For example, some of the infrastructure that we need funding for might be funded through an Olympic envelope,” Nenshi said.

“One could think of the Olympics as a way to manage the equalization payments problem that we have here in Alberta by actually brining in investment from the province and from the feds to make up a little bit for the huge amount of surplus taxes we send to those other governments.”

Focus on the need-to-haves, and put a pause on the nice-to-haves until Calgarians’ ability to pay recovers with the economy.