City of Calgary 2015 Surplus – What Do You Think?

Council

Last week Council was presented with details of a surplus from the 2015 operating budget.  You can see the entire report that was given to the Priorities and Finance Committee by clicking HERE.

While this surplus is unexpected, it is very welcomed.  Under the leadership of City Manager Jeff Fielding, we are beginning to see the benefits of budgetary restraint within a number of City departments.  This is a promising trend, and I will continue to push The City to keep finding efficiencies in their budgets.

The total surplus is $86M.  Of this, $54M in savings was found through corporate initiatives and $32M was found through savings identified at the business unit level.

A number of very key factors helped contribute to the surplus:

  • The City decided to not fill a number of job vacancies;
  • Low fuel prices made refuelling City vehicles less costly;
  • Increased revenues from various fees and fines;

The two components of the surplus go into different pots of money.  The $32M savings from the business units will be placed in the Budget Savings Account.  $54M from corporate initiatives goes into the Fiscal Stability Reserve (City of Calgary rainy-day fund).

I want to take a moment and explain what the Budget Savings Account is.  Council passed this account in 2015 to provide some incentive for City of Calgary departments to find savings in their budgets.

With the creation of this fund, City departments have very real incentives to find efficiency.  If a department finds savings, 50% of those funds can be used for business level initiatives in following budgets.  Under the old system, none of these savings would be redistributed for the department.  Essentially, wasteful spending happened as departments tried to reach their budget targets.

In order to remain responsive to short term economic conditions, The City does retain flexibility on the uses of funds in the Budget Savings Account.  In times of economic hardship, these funds may be used to address areas that require support.  You can find the 2015 report about the Budget Savings Account HERE.

After $32M from business unit savings is deducted, The City is left with a $54M surplus.  In June Council will decide what should be done with these funds.  There are a number of options that could be considered:

  • One-time rebate to tax payers: It is no secret that Calgarians are hurting right now. Calgary is feeling the brunt of rising unemployment rates, and some folks are having difficulty making ends meet.  In 2016 Calgarians are scheduled to see a 3.5% increase to their property taxes.  Offering a one-time rebate to tax payers would nearly eliminate this increase for the following year.  Each property tax bill would see a reprieve of roughly $100 in 2017.
  • Shovel-ready infrastructure projects: There are a number of infrastructure projects that are ready to begin construction, but do not currently have funding. $54M in funding could certainly help kick some of these projects off.  This could translate into the creation of many construction jobs in 2016 for a market that badly needs more employment opportunities.
  • City of Calgary “rainy-day” fund: This fund is where the funds are currently sitting.  The City has a fund called “the financial stability reserve (FSR).  Currently this fund sits at $374M.  The City may draw on this fund during times of economic hardship to continue delivering the services Calgarians depend on.

I have a few thoughts on these options:

Tax Rebate

I have had the chance to speak with a number of Calgarians that are anxious about our current economic realities.  They are concerned that further increases to their property taxes may jeopardize their ability to stay in their homes.  This is also a big concern for many folks in our senior community that are on fixed incomes.

I am not going to suggest that $100 annually will make a massive difference for most families, but relief is relief.  It would be important to note that this would be a one-time rebate on 2017 property tax bills.  I would hope that we could find more efficiencies in future budgets to offer further tax relief, but that is not a sure thing at this time.  I would also hope that by 2018 we are starting to see some improvements in our economic fortunes and Calgarians have reasons to be more optimistic about their financial situations.

Infrastructure

It is currently an advantageous time to build infrastructure.  There are many construction folks that are looking for work right now.  When labour is less available, prices are typically higher.  Moving forward on many of these projects now could help put folks back to work, and also save The City money in the long run.

$54M could fund several projects that are ready to begin construction in 2016.  These could create numerous jobs and deliver much needed infrastructure investments in our communities.  We would need to clearly understand what the return on our investment would be if The City decided to dedicate the surplus to infrastructure.

FSR

The FSR was created to provide support on Calgary’s “rainy-day”.  I would argue that it is currently raining.  I would greatly prefer to see Council give tax payers a one-time rebate or invest these funds in much needed infrastructure.

Let’s Hear From Calgarians

These funds belong to tax payers.  While your elected official can share a number of ideas of what could be done, your voices must be at the table for this important decision.

I look forward to Council’s debate on what to do with the $54M corporate initiative surplus, but I will also be asking what options we have with the $32M in savings from the business units.

I turn the question over to Calgarians: What would you like The City to do?

You can send your feedback to Ward12@Calgary.ca.  I’m really looking forward to hearing your perspectives.