It doesn’t look like property tax rates in Calgary will be staying flat for the 2022 tax year, and a slight increase is coming.
Forecasted population growth and elevated inflation rates “make zero per cent tax rate changes unsustainable as we move into the next (four-year budget) cycle,” a report to city council read Monday.
And a request to increase the Calgary Police Service budget for next year could result in a further increase to property tax bills.
City officials are proposing a 0.64 per cent increase in the property tax rate for next year. And increasing the CPS budget could bump the rate change up to nearly one per cent — 0.99 per cent.
“When you’re at one per cent or less right now and inflation is three-ish per cent plus population growth, we’re up probably over four per cent,” city manager David Duckworth said.
“I think council is now in a really good place to really consider maybe reinvesting in places, strategic places.”
The budget, as proposed by city officials, will translate into between $1 and $1.60 increase per month for a typical homeowner.
In May, city officials told council it would strive for a zero per cent rate increase.
Mayor Jyoti Gondek said there is reason to be optimistic about the city’s economic future despite a lack of clear indication of recovery.
“While recovery is clearly going to be slow and steady, the recovery also gives us opportunities to plan and imagine and perform with more foresight than some of the boom and bust cycles that we’ve become so accustomed to and what has characterized our history,” the mayor said.
Police request more staff
A letter from outgoing Calgary Police Commission chair Bonita Croft outlined the argument for a $6-million increase in the police budget. She said CPS faces increased pressure from areas like an anticipated return to, or increase in, crime to pre-pandemic levels in 2022, increased complexity of investigations and process due to legislative changes, demand to address systemic racism, an increase in protests and demonstrations, low police morale and increased cyber attacks.
Gondek said she would like to meet with CPS and the commission to get more details on what they intend to put the funds toward.
“I believe that it’s always important to talk to commission and the service when they have a request like this,” Gondek, who has served on the police commission, said.
The request comes a year after the CPS agreed to give up $10 million from its budget in 2021 — all from the new hire area of the financial plan. Police project they’ll be able to add 38 new positions with the requested funds, and Croft noted in the letter they’ve had no growth positions since 2018, despite continued population growth.
Addressing media late Monday, CPS Chief Mark Neufeld said more than half of the 38 new hires would be civilian members and on top of the already-budgeted 60 new positions police were planning to hire in 2022. He added the additional tranche of hires is “necessary” to help reduce gun violence, modernize the HR department and fulfil police commitments to equity, diversity and inclusion, and anti-racism.
Neufeld said like the rest of the city, revenues have been impacted by the pandemic.
“The most significant of those impacts involve reductions of revenue coming into the (police) budget,” he said. “This has negatively impacted any flexibility we may otherwise have to internally deal with or respond to emerging priorities that come up partway through the (four-year) budget cycle.”
The police chief said Calgary police have been returning “a number of millions of dollars” to the city’s general budget in the past years, in response to the difficult economic environment.
City administration found more than $53 million in operational savings for 2022 through the Solutions for Achieving Value and Excellence (SAVE) program, and the Water & Recycling department found $6.5 million in savings to freeze user fees at 2021 levels.
City investments yielded a further $5 million in income, but council decisions to increase funding for a variety of initiatives added $16 million. That results in a net change in the city’s budget of just more than $11 million, but 40 per cent of city services are projected to have an operating budget at or below 2018 levels.
“We have left no stone unturned,” Duckworth told council, adding council would need to find $17 million in budget reductions to get down to zero increase.
The SAVE program has found nearly all available efficiencies, Duckworth said.
“Any further reductions that we put into place is going to have significant impacts on the services that we provide,” he said. “We’ve done a really good job making sure that hasn’t happened to date.”
Ward 13 Coun. Dan McLean called the sub-one per cent increase “palatable.”
“Of course, we would like to see zero per cent — a freeze would be nice,” McLean told reporters. “I think as long as you don’t add a whole bunch of more things to it, we should be fine.”
But his fellow councillors pointed out that there were some initiatives not represented in the budget: affordable housing, snow removal, climate and downtown revitalization — issues they heard while door knocking.
Ward 8 Coun. Courtney Walcott said the focus of minimizing the budget was a leftover legacy of his predecessors. He called the 2022 budget adjustments an opportunity to set the table for the 2023-2026 budget cycle.
While campaigning in the ward that stretches from Rosscarrock to the Beltline to Elboya to Lincoln Park, Walcott said the variety of responses to the idea of property tax increases had a trend.
“The moment we spoke to anybody who saw the decline in the quality of services offered, then that taxation conversation was much more easier to handle with regards to increasing taxes to increase value of services,” Walcott said.
“However, there’s a large demographic that we often speak with who tend to use city services much less, and in that demographic, it’s quite often a conversation about how do we lower taxes despite the fact that we use the services a little bit less.”
“I think serving the best interest of Calgarians should not be stuck on a number,” the mayor said.
“I think what we need to do is figure out what it is that people are seeking to have a great quality of life in our city and then we figure out what the numbers look like from there.”
In 2021, Calgarians saw a decrease in their tax rate of 1.77 per cent. And since 2017, the city has provided $251 million in property tax relief in the Phased Tax Program as well as one-time rebates for residential and non-residential taxpayers.
The continued COVID-19 pandemic is expected to hit the city’s bottom line by just less than $40 million next year, mostly in lost revenues from parking, penalties, recreation facilities and lower transit ridership.
City officials are also proposing changes to rates and fees to “minimize financial impacts to Calgarians and businesses.” Those include a five per cent drop in fees for building safety and development approvals, zero ticket surcharges during for-profit festival park bookings, freezing garbage and recycling fees to 2021 levels and others.
The recent property tax roll assessments found some property types continued their trend from last year.
A typical single detached residence saw a nine per cent increase in value, and large format warehouses saw a nearly four per cent increase in value. Those warehouses will likely see double-digit tax rate increases, but hotels — which saw more than 18 per cent drop in value in the past year — will see a more than 16 per cent drop in tax rates.
A typical downtown “AA” class office tower saw a slight drop in value — just 1.75 per cent — and will likely see a sub-one per cent increase in its tax rate.
And after a more than five per cent drop in value, a typical retailer in the 17th Avenue business improvement area will see nearly three per cent relief in its property tax rate.
Ward 9 Coun. Gian-Carlo Carra said he looked forward to figuring out how to smooth out volatility non-residential taxpayers have faced in recent years.
“We can’t keep on keeping on the way we’ve been going,” Carra said.
City council will be deciding on adjustments to the city’s 2022 budget the week of Nov. 22.
Calgarians are welcome to register their thoughts on the city’s website ahead of the budget meeting week.