FAQ on the indicative property tax rate

Post Date: Thursday, June 30, 2011
cityhall500px-bw - approved for use
Photo courtesy Brad Taylor (www.bradstaylor.com)
Over the past 24 hours, Mayor Nenshi's office has received a lot of questions about the indicative tax rates set by City Council. While we are responding to every question we can, there are some that we're getting asked quite often. Here is a evolving list of our Frequently Asked Questions regarding this issue:

1. What is the indicative property tax rate?
This rate is an indication from City Council of what it expects The City of Calgary's budget to be. Now that this indication has been given to City Administration, managers will spend the next few months determining how they can continue to provide the services citizens expect within the budget envelope determined by Council.

2. What indicative property tax rate did City Council set?
Upon Mayor Nenshi's recommendation, Council decided to set a lower tax rate increase than originally proposed. The new indicative tax rate matches the rate of municipal inflation plus the population growth of Calgary.

3. Mayor Nenshi talked about efficiencies and cuts. But isn't this a budget increase?
Given inflation (for example, the price of gas has gone up about 40 per cent in the last year and the City is not immune), even this budget increase that matches inflation and population growth means the City must find over $100,000,000 in efficiencies or cuts to balance the budget. In November, City Council will learn how City managers plan to meet that challenge.

4. How does Calgary's taxes compare to those in other cities?
Calgary's tax rates are very low compared to most other cities in Canada. Toronto, Saskatoon, Halifax, Red Deer and Lethbridge (just to name a few cities) all have higher property tax rates than Calgary. Even if one adds in the utility rates we pay, Calgarians still pay much less than most other cities in Canada--including much smaller cities!

This recent graph, prepared by the City of Edmonton to compare their tax rates to other cities, shows how Calgary stacks up with both property taxes and utility charges combined. Calgary appears as the fourth-lowest in this survey.

This next graph, prepared by the City of Calgary, compares the property tax rates between the city and communities in the Calgary region. When one compares the amount of property tax per person, Calgary comes up lowest as well.

5. Will my property tax dollars go toward building the Peace Bridge, Airport Trail Tunnel, or West LRT?
No. Major projects like these are funded out of capital budget for the City whereas our property taxes only go into the operational budget for the City. So, in the case of these two projects (and other infrastructure projects like them) the money comes from funding from other levels of government in the form of grants or funding initiatives.

In other words: whether or not these major infrastructure projects are built, the indicative property tax rate would still be the same.

6. If the tax rate is based on inflation, why is there still a shortfall?
This happens because the structure for funding our municipal governments is broken. Only half of the City's income is flexible and under Council's control (ie: the property tax rate). That means that an increase in expenses of 3% would require an increase in the property tax of 6% to be a balanced budget. City Council agrees that this is not sustainable.

In fact, City Council agreed in it's three-year plan for Calgary to pursue changes to the Municipal Government Acts that will address the fiscal imbalance between the different levels of government. Calgarians pay net $12 billion a year to the Federal & Provincial governments while the City of Calgary, through the property tax system, only collects approx. $1.2 billion to pay for all the services (roads, parks, transit) the City provides to the public. We need to fix the tax structure so we can get a better deal for Calgary and Calgarians.

- Daorcey from Mayor Nenshi's team