Small business group wants council to make hard spending choices
The Canadian Federation of Independent Business says it’s time for city council to quit using “shortterm solutions” to fix a long-term tax burden problem in Calgary after councillors approved another hike for commercial property taxes.
The city was able to cap the property tax increase for businesses outside the core at 10 per cent in 2019, thanks to a one-time cash injection of $45 million drawn from city reserves. Over the past two years, the city spent a total of $90 million in reserve funds to soften the blow from the tax shift to suburban businesses caused by downtown office vacancies by capping property tax increases at five per cent.
Homeowners in 2019 are expected to see a property tax hike of 3.45 per cent, while businesses get what’s being billed as a break, with a 1.42-per-cent increase.
Amber Ruddy, director of provincial affairs with the federation, said the continued year-over-year increases are due to the city using “cost-containment measures” and “spending like there has been no economic downturn,” rather than making hard choices on scaling back spending on services.
“They’re still increasing in spending, but they’re spending less than they intended to ... that’s not going to cut it,” Ruddy said. “Cutting down on your wish list items for the future is not the same thing as actually finding efficiencies.”
The 2019 budget will see approximately $8 million of tax burden shifted from businesses onto homeowners, with additional savings found in city salaries and wages to bring the business rate down further.
With the downtown office vacancy rate in Calgary climbing to about 23 per cent in the first quarter of 2018 from 20 per cent a year earlier, Ruddy said council needs to find ways to “trim back” spending and bring the commercial property tax rate down, or risk an exodus of businesses from the city.
“These one-year measures at a time are great short-term solutions, but we’re now into the third year of short-term solutions. And until we wake up to the fact that that value is not coming back overnight, then we’re just going to be driving more business owners away,” Ruddy said.
A survey of Calgary businesses conducted by the federation in February found 53 per cent of respondents have considered relocating outside of the city “due to the level of property taxes.”
But for Bernard Drouin, owner of 17th Avenue Framing, moving out of Calgary isn’t an option, even if he did want to uproot his business.
Drouin owns the lot where he’s had his small business for more than 20 years, and said the value of his property has been inflated beyond what it’s actually worth due to the city assessing the commercial property based on land size and not potential revenues.
And with his property taxes climbing from $21,000 two years ago to almost $46,000 in 2018, Drouin said he’s worried what next year’s increase will bring.
He also questioned why council gave $9.5 million to a failed $30-million Olympic bid corporation while the city is continually forced to pull from reserves as a property tax stop-gap measure.
“To me, they need to fix the situation, and part of that is the spending,” Drouin said. “Get it straight. You didn’t have the money to go and put in an Olympic bid, and then the day after ... it’s like, “Oh, gee, we have a problem with our budget. We don’t have enough money.’
“There’s a problem downtown because of the economy and the oil industry ... and because (council) don’t have their act together.”