The following is a media release that I just issued and will share in full here, along with the Notice of Motion being brought forward on Monday.
Calgary, AB, June 7, 2019 – On Monday, I will introduce a notice of motion that has come about after several weeks of collaboration with fellow Councillors. Last week, the majority of Council got together, issued a release identifying that we would be providing tax relief to Calgary’s business community by, in part, cutting the Calgary operating budget.
Calgary businesses are owned and operated by Calgarians who in turn employ their fellow Calgarians and are the key to Calgary’s economic success. Over the past five years, the continued economic downturn has had a deep impact on the assessed value of properties in our downtown core, which in the past we leaned on to fund a disproportionate amount of the City’s operating budget. Because of this tax shift, businesses outside of the downtown core have seen an unfair increase in their property taxes.
While Council has tried to address this issue several times, we have not been able to reach a consensus. Calls from the media and from the public have stated that Council needed a wakeup call, and that may be true. On Monday, together with nine of my colleagues sponsoring this motion, we will present a plan to provide $130.9 million in tax relief to businesses, eliminating property tax increases related to the tax shift and actually resulting in a decrease. Included in this relief is $60 million in immediate cuts to our operating budget, providing lasting relief to our business community while creating a more equitable share of the tax burden between residential and non-residential property owners without requiring further increases to residential property taxes. Administration has committed to getting this money to businesses by August 1.
To set expectations, cuts to the City’s budget will have an impact on services and programs. The City will endeavour to limit these impacts through efficiency gains, but these cuts will allow businesses to remain open, grow, and keep Calgary working.
This motion will limit our reliance on one-time funding sources for property tax relief, while allowing programs designed to attract new businesses, diversify our economy, and create jobs to continue, now with the added promise of a more equitable and friendly tax system for businesses. “Limitations continue to exist with our assessment system, and while the Province has made it clear that it’s not going to reduce the amount of property taxes it takes from Calgarians, we need to push for change in the regulations that govern the system,” said Councillor Shane Keating. “On Monday we will present a collaborative plan that is the culmination previous proposals, with the majority of Council coming together to assist our business community and reduce their taxes.”
NOTICE OF MOTION
RE: Immediate Tax Relief for Calgary Businesses
Sponsoring Councillors: Keating, Sutherland, Colley-Urquhart, Woolley, Chahal, Davison, Demong, Magliocca, Chu, Carra
- WHEREAS Calgary’s economic downturn has resulted in the second highest unemployment rate in Canada, a significant impact on downtown vacancy rates, and declining property values of downtown office buildings, resulting in a $250 million shift in and redistribution of property taxes among non-residential property taxpayers mainly outside the downtown in 2019;
- AND WHEREAS Calgary City Council established the Municipal Non-Residential Phased Tax Program to assist non-residential properties impacted by tax increases due to the large shifts in market value for the 2017 and 2018 tax years, limiting tax increases due to these changes in the assessed value of non-residential properties to 5% in 2017 and again in 2018;
- AND WHEREAS The City of Calgary (The City) had previously set aside $70.9 million ($44 million from the Fiscal Stability Reserve and $26.9 million within the Budget Savings Account) for tax relief for small businesses through either a grant program or a phased tax program in 2019;
- AND WHEREAS property taxes are the primary source of funding for The City’s operating budget to support the delivery of municipal services to Calgarians, with The City collecting property tax from approximately 14,000 non-residential properties and approximately 500,000 residential properties;
- AND WHEREAS on April 8, 2019 Council continued to shift the tax burden from non-residential property taxpayers to residential property taxpayers, where the total tax revenue share is now 47% residential (+1% change) and 53% non-residential (-1%);
- AND WHEREAS more than half of non-residential properties will experience an assessment-related tax increase in 2019 great than 10%, with approximately 1,300 non-residential property owners experiencing property tax increases of 30% or greater, approximately 1,400 non-residential property owners experiencing property tax increases of 20 to 30%, and approximately 5,250 non-residential property owners experiencing property tax increases of 10 to 20%;
- AND WHEREAS Provincial law, specifically the Municipal Government Act and related regulations, establishes the property tax system, including the methods of assessment and the distribution of taxes among non-residential taxpayers, which have resulted in these massive tax increases for Calgary businesses;
- AND WHEREAS during this current economic downturn, the Province has requisitioned approximately $3.8 billion from Calgarians through property taxes over the past five years, which accounted for 30.5% of the total property taxes collected in 2018;
- AND WHEREAS Council addressed this issue in the 2019 operating budget, recognizing that the magnitude and impact of this complex problem requires short, mid-term and long-term solutions with challenging economic forecasts anticipated to continue over the next three years of the Business Planning Cycle;
- AND WHEREAS when Council approved the One Calgary 2019 – 2022 Service Plans and Budget (One Calgary) on November 30, 2018, further direction was provided by Council to Administration to undertake a comprehensive “Line of Service Review” (LOSR) to closely examine the 61 lines of service in which Administration advised that such a LOSR will take a minimum of 18 months;
- AND WHEREAS it is important to acknowledge that during the 2015-2018 period in dealing with the economic downturn, City Administration through intentional management of the operating budget identified and realized $614 million in cost savings and efficiencies, and further, leading into the One Calgary Budget, an additional $40 million in efficiencies were incorporated, with a further $16.5 million in salary and wage reductions realized for 2019;
- AND WHEREAS during One Calgary budget deliberations, although not directed by Council, Administration also committed to finding an additional $60 million total in efficiencies and budget reductions within the remaining 2020 – 2022 cycle;
- AND WHEREAS salaries formanagement exempt staff were frozen in 2018 and 2019, while in 2017 the exempt salary ranges were frozen so those at the top of the range had a salary freeze, while Council has been advised that The City does not have the authority, nor has it been granted by the Province of Alberta, to roll back wages and salaries of unionized employees as a mechanism to reduce the operating budget and ultimately the tax burden;
- AND WHEREAS City Administration has requested that Council provide it with clear direction for the remaining three years of the Business Planning Cycle;
- AND WHEREAS the intent of this Notice of Motion is to direct Administration to identify additional operating cost reductions for Council to implement immediately to provide immediate tax relief to Calgary businesses that drive the Calgary economy and make this a world-class city;
NOW THEREFORE BE IT RESOLVED that:
- Council reconsider and rescind its motion on May 27, 2019 “That Council direct Administration to commit $70.9 million of one time funding ($44 million from the Fiscal Stability Reserve and $26.9 million within the Budget Savings Account) for strategies related to short term mitigation measures or potential long term solutions for business in Calgary, to be determined through the work of the Financial Task Force (to be formed once the Terms of Reference are approved) and/or the working group, with options to be recommended to Council through Priorities and Finance Committee no later than November 2019”;
- Administration identify permanent budget reductions of $60 million for the 2019 tax year and report back to Council, no later than July 31, 2019, with the details of the proposed reductions for approval, which may include, but are not limited to, reductions and/or the elimination of programs, services and staffing positions;
- Administration implement a 2019 Phased Tax Program (PTP), in a manner consistent with 2018, using the $70.9 million as identified in 1 above and the $60 million as identified in 2 above as an immediate credit to non-residential property tax accounts. This combined amount of $130.9 million (one-time) will result in capping non-residential tax changes at -10.0% for 2019 (excluding increases as a result of non-market changes like property upgrades and expansions), on a basis proportional to the non-residential tax accounts’ increases above the previous year, and before business tax consolidation impacts (approximately 4.2% increase);
- Administration to make available to the eligible non-residential property owner the impact of the 2019 PTP on or before June 28, 2019 on a best effort basis. Administration will ensure eligible PTP participants will see the monthly amount adjusted no later than August 1, 2019, and payment for any remaining qualifying accounts with an outstanding credit balance will be made no later than July 31, 2019;
- Administration be directed to use the $60 million in 2019 permanent savings as identified in 2 above to reduce the non-residential tax rate impact for 2020 and beyond to achieve a shift from the non-residential assessment base to the residential base.
- Council requests the Mayor to send a letter to our partners in the provincial government requesting to engage in discussions regarding assessment reform.