Help wanted: How should we use the $52 million?

Post Date: Saturday, May 18, 2013
Naheed Nenshi - formalThis month, I wrote a special column in the Calgary Herald just about the public conversation we need to have about how to use the $52 million tax room. Here is the full text of that story: 

I need your help.

Your city council has just launched a public conversation on what to do with the $52 million that you've heard about.

First, let me explain where the $52 million - what is referred to as provincial "tax room" or a "tax surplus" - came from. Currently, about 60 per cent of the property taxes you pay go to the city for operations (everything from the police department, fire and 911, to road maintenance and parks and recreation facilities). The other 40 per cent goes to the province, and they annually send us a bill for their amount.

The city passed its 2013 budget in November 2012. The province, after its own budget in March, actually asked for less money than we expected.

This means that, within the budget passed last November (and with tax bills being printed and set to go out), we have $52 million annually more than we expected. While it's not a huge portion of our $3-billion budget, it is a lot of money.

So now we're asking you what you think we should do with it.

Under council policy, this money cannot be used for day-to-day (or operating) expenses, which we must fund through property taxes and user fees. However, we can use the $52 million for the kinds of things we often ask the province to help pay for: one-time (or capital) expenses to build things or for reducing our debt. We could also reduce taxes.

This is a remarkable opportunity for Calgarians. We have five great options, and all would enhance Calgarians' quality of life. All reflect priorities you've told us are important to you.

The options are:

- "Let the buses roll!" A new dedicated capital fund for Calgary Transit would allow us to build a number of the unfunded capital priorities in the RouteAhead plan. This could include new dedicated transitways in southeast and north-central Calgary, as well as a transitway between northeast Calgary and the University of Calgary, better connections to Mount Royal University, and a new transitway on 14th Street S.W. from Woodbine to MRU and downtown.

It would also allow us to reduce LRT crowding and improve reliability by accelerating purchases of new LRT vehicles.

This option is the only one that would leverage funding from other governments (we estimate that every dollar spent here could attract $1.50 from the provincial and federal governments), but it will likely increase operating costs in the future, which would have to be covered from cost cutting elsewhere, taxes, or fares.

- "Give business a break!" While Calgary's residential property taxes are the lowest of any major city in Canada, our non-residential taxes are more in the middle of the pack. In fact, the non-residential rate (paid by businesses like stores, offices and factories) is almost four times the residential rate. In other words, for every dollar a resident pays in property tax, a business pays $3.91 (to be exact). Applying this money to reducing business taxes would reduce that ratio to 3.67. While it's not a huge amount, it would reflect our commitment to a competitive business tax regime.

- "Revitalize our communities!" More than 90 neighbourhoods in Calgary are over 50 years old. Currently, we maintain and improve these neighbourhoods as needs become critical and money becomes available. This option would invest in maintaining and improving things like streets, sidewalks, street lights, parks and neighbourhood recreation centres on a community-by-community basis, starting with older areas and eventually cycling through all Calgary neighbourhoods.

- "Drop the debt!" Calgary's debt stands at $3.4 billion. While we think this level of debt is manageable, annual interest payments eat into our annual operating budgets. Reducing the city's debt and our annual interest payments could save taxpayers about $3 million per year for other priorities, but would not build anything new.

- "Give it back!" Calgary still has the lowest property taxes of any major city in Canada. We're proud of that advantage. Putting the money back in your jeans means you can spend it on priorities that are important to you, but it means we can't aggregate the funds to build public projects. Applying the $52 million to property taxes would mean a savings to the average household of about $10.50 per month.

Council will make a decision in July, and we'd love to know what you think before then. Please visit calgary.ca/52million to join the discussion, contact 311 with your opinion, or join us for a series of face-to-face events, including a live debate with each of the options being championed by one of the aldermen - and Brett Wilson asking tough questions! That debate will be on May 28 over the lunch hour at the Devonian Gardens.

This conversation is an important one, and shows that we as a community can come together and have serious discussions about serious issues in a way that respects all points of view--and can be a little bit of fun too.

I'm looking forward to hearing your thoughts!

- Mayor Naheed Nenshi