City council pursues tax freeze yet a hike still in cards

Calgarians will get their chance to go before city council Monday and tell politicians what they think of next year's budget.

A full day has been set aside for a public hearing on the budget, which must be held before council gets down to making adjustments to next year's spending plan.

The four-year budget was approved last November.

It includes a 3.03 per cent tax increase for 2020. But there's little appetite for that increase in this economic climate.

City council asked administration to present it with options for a 1.5 per cent tax hike as well as a tax freeze.

Both of those options call for spending cuts and job losses.

Push for zero

Council seems bullish on a freeze.

"Talking to my colleagues, it's going to be a zero," said Coun. Ward Sutherland. "There's a majority of my colleagues that want it to be a zero."

The tax freeze scenario includes an $8.4 million cut to the Calgary police budget, 236 city job cuts, less money for civic partners like the zoo and Heritage Park, as well as reductions for the library and Calgary Transit.

Some councillors have indicated they want to see the cuts go deeper but they aren't offering specific ideas.

Last week, council approved asking city unions to forgo a 1.5 per cent wage increase that kicks in on January 1. Sutherland said agreeing to the wage freeze could save jobs for city workers.

The same pitch was made to the unions last July but the idea was rejected, and 115 city workers were laid off in August and September.

Mayor has concerns

Mayor Naheed Nenshi said a tax freeze is possible but there would be significant impacts to city services.

"I want to make sure that my colleagues really understand the implications of making those cuts," said Nenshi.

He's more supportive of a 1.5 per cent tax hike, based on what is currently on the table. 

For example, it would preserve the existing police budget. Through a reallocation of money, the city is looking at filling in a $13 million reduction in police revenues due to the recent provincial budget.

Still, the smaller tax hike would result in other spending cuts, including 177 job reductions and the deferral of a new fire station in north Calgary.

When a tax freeze isn't a freeze

Even if council votes in favour of a tax freeze for 2020, there's every reason to believe tax bills will still increase next year.

First, the provincial government has increased its education property tax requisition for this year by $15 million. 

This year's taxes have already been collected by the city, so that's money it will have to add to next year's tax bills.

Second, council continues to grapple with a shift in the business property tax burden from the downtown to areas outside the core.

Over the last three years, council has approved spending more than $200 million from savings accounts to give rebates to business property owners to offset double digit tax hikes.

Nenshi said council doesn't get much credit for having offered that support.

"I feel like even my own council members don't talk enough about what we've actually done," he said.

This year, there's no money left to give any rebates.

Tax shift coming soon?

Council will instead discuss shifting some of the non-residential tax burden over to homeowners.

It means that even if council approves a freeze, the shift would result in a tax hike for residential accounts.

Nenshi acknowledges that even if a tax shift happens, business property owners would still end up paying more tax next year.

"It's not going to fix the problem. It will help, but ultimately, there are only two long-term solutions to this problem," said Nenshi.

"One is tax reform, where we find different ways of collecting taxes that don't require, don't rely on how wealthy your landlord is compared to other landlords and number two is really filling the downtown."

Businesses want greater certainty

The president of the Calgary Chamber of Commerce, Sandip Lalli, said there are things council could do in addition to shifting the tax burden.

She said the city should sell some of its large holdings of land to gain revenue and increase the tax base.

"Look at the actual service delivery of what citizens are wanting and are you delivering that the most effective way?" said Lalli.

More than anything, Lalli would like to see city council find a longer term tax solution for business owners rather than lurching along year by year.

"Certainty is key to me. It determines how I put my business model forward. What do I charge my customers? Do I grow? Do I add another person to my payroll?"

Council has set aside five days for its annual budget debate.

Next year's tax bills cannot be finalized until after the provincial budget is presented in the spring. That's when its education property tax requisition for 2020 will be known.