‘One taxpayer’: Calgary eyes tools to address funding gap from other orders of government

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‘One taxpayer’: Calgary eyes tools to address funding gap from other orders of government
The City of Calgary has explored other potential tools to address a gap in funding from other levels of government that isn't keeping up with population growth. As Adam MacVicar reports, Calgary's mayor says a better funding framework from the province and federal government is the preferred option. – Sep 27, 2023

The City of Calgary has compiled a list of potential options to help address a years-long funding gap from other orders of government, which is becoming a growing issue in other municipalities across the province.

However, when and if the options would be implemented is up to city council and not anytime soon.

It comes after a newly released city report revealed that, since 2007, Calgary faces an average annual funding gap of $311 million.

The numbers don’t mean the city is in a budget deficit. In fact, a surplus is expected this year; but they represent the city “stepping in to fund provincial responsibilities.”

“It’s actually pretty reflective of what municipalities are facing in Alberta and throughout the country,” Calgary mayor Jyoti Gondek said. “It’s pretty clear that in order to serve our public better and to invest in infrastructure, we do need a better partnership and a better deal with the provincial government.”

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Gondek said that while Calgary’s population has grown 34 per cent between 2007 and 2022, with more record growth expected this year, funding to accommodate that growth from other orders of government hasn’t kept pace.

The mayor added that lack of funding puts more pressure on municipalities to fund those services with limited tools available.

“The only taxation power we have right now is property taxes, and it’s regressive,” Gondek said. “It doesn’t work well; I think the time is long-overdue to understand how to properly fund and finance municipalities in partnership with two orders of government.”

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City administration has put together a list of potential alternative options for the city to generate more revenue, based on recommendations from a financial task force as well as inquiries from city councillors.

The 39 potential options are both short and long-term mechanisms with most requiring legislative changes to piggyback on provincial and federal tax systems.

Seven options have been short-listed based on a set of proposed criteria, including a discontinuation of provincial property tax collection, a municipal fuel tax and the sharing of royalty revenues.

City of Calgary chief financial officer Carla Male said the report is “just the first step,” to guide future discussions and decisions from city council to close the funding gap.

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“We need to continue to look at how we finance our future, our aging and our increasing infrastructure and be able to balance the revenues that we have with the expectations of citizens and our infrastructure over time,” Male said.

Male noted any next steps would come down to city council.

“This report was very important to highlight sort of contextually where we are and taking that longer view,” she said.

However, Gondek said the preferred option is for a better funding framework for municipalities from both the province and federal government.

“Instead of giving us new tools so that we are increasing taxation, simply provide us with our share of what they are generating,” Gondek said.

Gondek is in Edmonton this week with other representatives from cities and towns across the province at the Alberta Municipalities annual convention.

The municipal association is calling on the province to increase the base funding for the Local Government Fiscal Framework (LGFF) to $1.75 billion from its current $722 million.

The LGFF is a program that will provide infrastructure funding to municipalities in 2024.

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Alberta Municipalities president Cathy Heron said infrastructure funding from the province has declined, causing an estimated $30 billion infrastructure deficit.

“The provincial government’s spending on infrastructure has dropped from 3.7 per cent of total spending a decade ago to just one per cent today,” Heron said.

The province said the funding is expected to increase 14 per cent to $820 million in 2025.

Lori Williams, a political scientist at Mount Royal University, said creative solutions are needed because all three levels of taxation come from “one taxpayer,” and many are facing escalating costs of living.

“The people that live in these municipalities are already pretty strapped, and asking more of them, or providing less to them of what they need is not going to to be very well received,” Williams said. “I think a lot of folks are tired of governments fighting with one another. They want those governments to take the problems seriously and to work with one another to try to solve these increasing challenges..”

Meanwhile, Calgary city council is preparing for budget deliberations in November; which will include decisions on a list of 30 unfunded, priority investments identified by city administration.

The investments would include more money for transit upgrades, improved firefighter response, affordable housing, and new infrastructure.

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“Right now we’re figuring out how we do it alone because that’s what we’ve been left to do,” Gondek said. “It would be amazing to have a stronger partnership with both the provincial and federal governments.”

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