How I voted on 2020 Budget Adjustments

By now I am sure you have seen facebook posts with voting cards, or read an article or an opinion piece describing the events during City Council’s budget discussions. Here is my take on what happened.

On Monday, November 25 we began by hearing presentations on three potential budget scenarios from our administration based on direction given by Council in July. Two of these scenarios represented a reduction from four year budget plans—a 1.5% in the overall operating budget, and a freeze (0% increase) to the budget. The other scenario was the previously planned 3.03% increase to the overall operating budget. That represented a maintained budget plus inflation and expected growth.

According to City administration, the proposed 1.5% scenario equated to a $26.5 million reduction from the inflation plus growth scenario (3.03%). The proposed 0% scenario equated to tax supported reductions of $52.5 million from the inflation plus growth scenario, and would maintain residential taxes at current levels.

For the rest of Monday we heard from the public, and on Tuesday and Wednesday individual City departments made presentations on their individual budgets. Council had the opportunity to ask questions of administration at that time.

On Thursday, the process of finalizing budget adjustments began in earnest. The 0% scenario was moved by Councillor Sutherland, but with a major change. This version proposed to maintain funding to the Police budget, the Fire budget, and certain services focused on vulnerable people. $13 million would have been the cost to maintain that funding, and the additional $13 million was intended to reverse cuts made in the Provincial budget through fine revenue, biological testing, and the cannabis tax. It was also proposed that this portion be shown in a separate line showing this increase as “provincial budget flow through”. While technically I never voted for this because I eventually voted against the overall budget, I would likely have been in favour of maintaining this funding. I am extremely sympathetic to the situation that the Provincial Government finds itself in, and frankly agree that they need to make some hard decisions. They need to do what they have to do, but I am also responsible for managing the City of Calgary. I cannot allow cuts from Province to slash essential services for my constituents, and I think it is imperative for maintaining transparent government that the public be made aware of where those cuts might be coming from. However, as you will see, I was in favour of maintaining these services through cuts elsewhere in the city budget rather than passing that cost to taxpayers.

With this “base proposal” in place, then came the time to make amendments. Here is a listing of proposed amendments, how I voted, and how they fared:

• Councillor Magliocca proposed an amendment to find $50 million in savings from all tax-funded departments excluding Police, Fire, 911, public transit, and maintain those spending levels through 2022. The motion also stated that any savings found be directed to lowering the operating budget, thereby lowering taxes. This is the 5% tax cut proposal you may have heard about. I voted in favour of this, because I believe that we need to maintain essential services, and look for savings in areas that most of us would describe as “nice-to-haves”. This amendment was defeated.
• Councillor Magliocca proposed an amendment to redirect $50 million from the Opportunity Calgary Investment Fund (OCIF) to a reserve that is used to fund our capital projects. I voted against this. OCIF is the City’s way to encourage investment and offer incentives to business, much like the way the Province is encouraging investment through decreased corporate taxes. To me, this cut would do the opposite of helping our economy grow. This amendment was defeated.
• Councillor Carra proposed an amendment to maintain funding for the Inglewood and Beltline pools for two years. These pools were originally slated to be closed in order to save money. The amendment equates to an increased cost of about $400,000 per facility. I voted against this. Measures like closing these underused pools are exactly what we need to make life easier for taxpayers. The amendment was successful.
• Councillor Farkas proposed an amendment to reduce the communications budget back to its 2014 level. This would have been a $1.2 million reduction. I voted in favour of this, because I would prefer to maintain essential services without asking the taxpayer for more money. The amendment was defeated.
• Councillor Farkas proposed an amendment to reduce the Calgary Arts Development base grant to $6.4 million from $11.4 million. I voted in favour of this for the same reasons as the last. The amendment was defeated.
• Councillor Woolley proposed an amendment to reconsider Council’s contribution to building a new event centre, and use that money to fund other capital projects like the Green Line. I voted against this motion. The event centre would be an economic driver in an area of Calgary that we need to strategically invest in. Furthermore, I am concerned about the legal implications of backing out of a deal that we have already agreed to in principle. The motion was defeated.
• Councillors Gondek and Colley-Urquhart then proposed an amendment that would become very consequential. In essence, they sought to keep tax rates at the level of the 0% increase scenario, but maintain funding associated with the 1.5% increase scenario by using what are essentially reserve funds. The proposal also called for the use of savings that had already been found or we are in the process of finding to maintain this funding in future years. I voted against this. While I appreciate that there was an effort made not to increase the operating budget in this proposal, to me it still does not show the spirit of the kind of restraint I believe Calgarians are asking for. The amendment was carried.

The budget as a whole, including all successful amendments, was then moved and voted on. I do not take voting against a budget lightly. To do so means you must either be prepared to come up with a new budget from scratch, or not have funding for ANY City services. With that said, and as I have already mentioned, I voted against the overall budget, which was eventually passed.

As I have also already mentioned, I believe the majority of my constituents, and probably most Calgarians, are asking Council for greater fiscal restraint than it has shown in the past. The majority of the cost cutting measures that I supported were not accepted, and as a result I could not accept the budget.

The Tax Ratio:

There is another element to determining tax rates—the ratio between residential and non-residential tax share. This element has been very important recently, because of a drastic drop in downtown property values that created high tax increases for businesses elsewhere.

It is a very serious problem. Businesses have been asked to shoulder too much of the tax burden for too long, but we should be careful about how we treat residential taxpayers while we find a solution. That is why I was not in favour of immediately increasing tax share of residential property owners from 49% to 52%.

I did, however, propose a gradual transition of this change by 1% each year until 2022. In my mind this would have solved the problem in a way that protects residential taxpayers. The intent was to ease the burden on business at a rate in line with corporate tax cuts that the Province is making. My motion failed, and the immediate tax shift was passed.

Speed Limit Reductions:

There is one motion arising from the budget deliberations that I would like to highlight before I am done. I have always been skeptical about the merits of decreasing residential speed limits, but regardless of my skepticism, it is definitely something that I do not think that we need to be spending money on right now. I was happy to second a motion put forth by Councillor Farkas to forgo spending on speed limit reduction engagement. The motion was passed, and resulted in $200,000 being reallocated to fund the Downtown Outreach Addictions Partnership (DOAP team) serving to reduce the impact of substance abuse issues and public intoxication.

I hope you have found this informative. Please don’t hesitate to contact me at www.calgary.ca/contactward14 if you have questions or comments.

Sincerely,

-Councillor Peter Demong