Council lays groundwork for distribution of tax burdens
Councillors aiming to strike the right balance between the two property types
Calgary councillors on Thursday debated the delicate balancing act of residential and business property tax share, as they prepare for the four-year budget process coming up in November.
In 2019, council asked for the creation of a financial task force to address tax stability after many businesses were hit with massive tax hikes due to plunging downtown office values.
On Thursday, that task force presented four reports on possible solutions to council's executive committee.
Councillors spent most of the morning focused on just one of those items: the overall framework of council's tax policy and specifically how to split the burden between residential and non-residential properties.
Currently, the municipal tax share is 52 per cent residential and 48 per cent non-residential. Administration told councillors that split is high for the non-residential side when compared with other cities. Officials also said business representatives have been advocating to change that split to 60 per cent residential and 40 per cent non-residential.
Last week, Calgary Chamber of Commerce president and CEO Deborah Yedlin called on the city to shift more of the tax share to residential properties.
“We can't have the property tax ratio be what it's been, because it's just not the way we can see a thriving business community in Calgary,” she said.
The two categories of property are taxed at different rates, but as property values fluctuate, council can adjust the percentage each category contributes to the tax revenue pie. For instance, if residential properties significantly increase in value in a given year, council could choose to shift more of the tax share to homes.
That issue consumed much of the morning debate, although any adjustments won't be made until the budget process.
City administration advised council not to adjust the tax share by more than one per cent in any given year, to keep tax bills more predictable and stable. However, Mayor Jyoti Gondek was concerned that limiting council in that way could be detrimental to the budget process.
She said there might be scenarios in which the various numbers in the formula used to set tax rates make the most sense with a larger adjustment to the share.
“If we then determine that the ratio is not good enough, we go back to the start …,” said Gondek. “It is a multi-step process. And we have decoupled the steps from each other over time. We need to put them all back together.”
Coun. Evan Spencer said the biggest challenge is how to communicate the process to the public.
“This feels like a massive liability for the City of Calgary in where we're at right now, in just how many Calgarians don't understand the journey that we've been on,” he said.