Discussing our options for the tax room

Post Date: Monday, March 21, 2011
Mayor Nenshi-7154I write a column in the Calgary Sun once a month. Here's an excerpt from my March article:

On Monday, your City Council will be discussing what to do with an unexpected tax offering from the Province of Alberta. Specifically, the province has reduced its portion of the property tax, and now City Council has to decide whether or not to move into the tax room the province has offered us or to return it to the taxpayer.

To understand what this means, some context is helpful.

The property tax that homeowners pay is remitted to both the province and the City — roughly half goes to each body.

So when Council passed its budget last year, we approved a property tax increase of 4.4%, or about $4.50 per month for the average house for the City’s portion. The thinking then was that the province would roughly match that amount, for a total amount to the average taxpayer of about $9 per month.

However, the province decided not to increase its share of the property tax, and, in fact, decreased it, leaving the City with a choice.

If we leave the total tax increase where we thought it would be in the fall (it’s actually about $8.16 per month for the average house), then the city would get an additional $42 million per year. You would pay what we had expected, but the proportion would change: More would come to the city for our needs, and less would go to the province.

Alternatively, we could choose to decrease the overall tax increase and return the money to the Calgary taxpayer. This would mean that the average household would pay an increase of a little over $2 per month.

I have long been advocating for a transfer of provincial tax revenue to the City in a predictable way. Indeed, according to research conducted by the City, Calgarians pay about $4 billion a year more to the province than we get back in benefits.

This has led to a strange system where we separate the responsibility for delivering the service from the ability or authority to pay for it. To use a timely example, your City Council wants desperately to build the S.E. LRT, but we can’t do it until — and unless — another government gives us the money.

For this reason, I believe that the responsible thing to do is to take this tax room from the provincial government and use it for specific purposes for Calgarians.

I want to be clear: I don’t want to use this money for operating expenses. I think that we need to be able to live within our means on this front, and I think that the budget that Council has already passed achieves that. We are continuing to find efficiencies and keep these costs under control.

I do think that we should use the money for things that we are otherwise begging the province and feds to fund.

Specifically, after looking through all of the city’s needs, I am proposing to Council—and to you—that we use the money for two purposes...

You can read the full article at the Calgary Sun.

As of today, Council hasn't made a decision on this topic (the above article is just my position). Let me know what you think in the comments below.

- Mayor Nenshi