Calgary’s 2024 budget proposes property tax hike of 5.7% with tax share decision looming

Adjustments to Calgary’s four-year budget are expected to come with an overall property tax increase of 5.7 per cent this year, but could rise as high as nearly 8 per cent for homeowners if city council makes a key decision on the city’s tax share.

The adjustments to the budget were released publicly for the first time on Tuesday when it was presented to city council ahead of deliberations later this month.

The increases to property taxes also remain contingent on city council decisions on recommended spending increases to meet the demand of a growing city, as well as the tax distribution between homes and businesses.

“Council and administration worked together to look at Calgarians’ priorities over the last year, and we figured out how we could deliver on their expectations,” Mayor Jyoti Gondek said. “Specfically, how we can deliver on better solutions for housing, public transit, transit safety, and the many amenities that people are seeking in their city.”

If all the measures included in administration’s recommendations are approved, city officials said the tax increase would be below inflation plus population growth.

Tax Shift Proposal

City administration is recommending a proposal to shift the tax share between businesses and homeowners by one per cent annually over the next three years.

Currently, residential properties cover 52 per cent of property taxes in Calgary, with businesses paying the remaining 48 per cent.

However, city officials note that for every dollar of assessed value, a non-residential property owner pays 4.26 times more municipal property tax than a residential property owner; a number set to rise to 4.59 if the tax share remains status quo.

“We have heard from them that they need help,” Calgary’s chief administrative officer David Duckworth told reporters. “They need help to remain competitive to ensure that we have a thriving business economy here in Calgary.”

If that number rises to an even 5:1 ratio, city officials warn it’s a legislated maximum and the provincial government will intervene.

“I’m not interested in intervention from another order of government when it is my fiscal responsibility to take care of Calgarians,” Gondek said. “I do hope that members of council understand what the responsibilities are and they vote accordingly.”

The impact of a one per cent shift in the tax share, and city council approving the budget adjustment as recommended, would see property taxes for the average residential homeowner rise 7.8 per cent this year; an average increase of $16 per month for a median priced home of $610,000.

Businesses assessed around $5.2 million would see a property tax increase of just 3.5 per cent, or an average increase of $277 per month.

Ward 1 Coun. Sonya Sharp told reporters that she would vote against the move as presented, with concerns over the impact to residential property tax bills.

“When we talk about an increase of $16 a month, that’s a lunch or coffee or food for your kids. So there are going to be some difficult conversations to have in the next two weeks,” Sharp said.

Sharp said she’d prefer a 3.4 per cent tax increase for 2024, which is what was proposed for next year when the four-year budget was approved last November.

“When we look at the surplus and all the reserves, we’re doing something wrong if we can’t hold the line at 3.4 per cent and still invest in our city,” she added.

However, Ward 8 Coun. Courtney Walcott said he was expecting to see a higher number, given various demands and ipressures on municipalities across the country.

“If I’m being absolutely honest, given the inflationary pressures and everything that we’ve seen, I was expecting it to be worse,” Walcott told reporters. “For me it’s a degree of relief.”

City council voted against shifting the tax distribution during a meeting earlier this year.

Spending Proposals

City administration is also recommending council approve a list of investment items in this budget adjustment that includes new spending to build more affordable housing, implement the City of Calgary’s housing strategy, improve transit and community safety, and make improvements to the city’s pathway and road infrastructure.

According to city officials, the spending proposals would be funded through surplus funds, reserves and tax revenue.

The City of Calgary is anticipating a $100 million surplus in 2023, with an additional $165 million of unbudgeted revenue from local access fees.

These investments will require a $ 96.5 million increase in ongoing operating funding and $68 million in one-time funding in 2024.

The adjustment to the four-year budget also includes $426 million in new capital investments.

According to the budget, implementing the city’s housing strategy will cost $27 million in operating funding and $54.5 million in one-time costs next year. About $90 million in capital funding is also recommended to improve access to affordable housing.

The investments in affordable housing represent a 426 per cent increase to their existing budget with the goal of boosting development by an estimated 1,000 more market homes beyond what is normally built in a year, and at least 3,000 non-market homes a year.

“With the way that the crisis has spiralled, I think the fact is we don’t have any time to delay any of this spending because it’s so significant to the impact it will have for people in need of a good, safe, secure and attainable home,” Walcott said.

Administration is also recommending a $ 15 million increase in funding to help improve transit safety by bolstering resources and peace officers across the network.

$10 million of the surplus from local access fees is anticipated to be used to create a one-time relief program amid soaring energy costs.

The spending proposals, without the tax shift, are expected to result in an overall property tax increase of 5.7 per cent, or 12 dollars per month for the average Calgary homeowner.

In a statement, the City of Calgary said it has “managed its finances responsibly over the last decade” compared to other large Canadian cities, with an average annual tax increase of 1.13 per cent between 2019 and 2023.

Gondek told reporters that years of austerity, and a growing infrastructure deficit due to the downloading of responsibilities on municipalities from other orders of government, have led to some tough situations for Calgary that need to be addressed through the budget adjustment.

“We have now hit a time where we can no longer continue to disinvest in our city; I say that because we’ve spent a number of years making cuts,” Gondek said. “As a result, we’ve learned from our administration that we simply can’t keep up with maintenance on facilities, we can’t keep up with maintenance on parks, and we are letting people down in terms of the services that they need and wish to have in their community.”

City council will begin budget deliberations on Nov. 20.