June 27, 2016

5 ways Calgary could cut spending — that would ALSO cut property taxes

Paige MacPhersonAlberta CTF Director

(Paige MacPherson is Alberta Director of the Canadian Taxpayers Federation. This op-ed was originally published in the Calgary Sun on June 24, 2016.)

Calgary city council is finally looking for ways to cut costs. Blowing $5 million to explore the idea of an Olympic bid is not one of them -- but there are many ways to do it.

Property tax bills hit Calgarians like a ton of bricks this year. Councillors received a record number of angry phone calls.

It turns out suggesting Calgarians were lucky the property tax hike wasn’t as high as councillors had originally planned, didn’t go over so well.

Property taxes are slated to rise by 4.7 per cent next year. That’s too high. The city has seen thousands of layoffs and many Calgary businesses are shutting their doors.

Calgarians need a property tax cut.

Calgary’s businesses are looking at their budgets, reviewing spending items, and making cuts. It’s tough, but it’s reality. With a projected budget shortfall between $20 million and $46 million, it’s a reality the city should face too.

There are many ways city council could cut spending, but here are a few to get them started:

1)    Start with a line-by-line spending review

First, city councillors need to define what the core services of government are and let that guide a spending review. If something isn’t a necessary function of government, it should be up for review or be cut.

2)    Roll back city employee compensation by 5 per cent

Rolling back compensation by 5 per cent is enough on its own to address the 2017 budget shortfall. Salaries, wages, overtime and benefits eat up 45 per cent of the city’s tax-supported expenditures.

When businesses need to save money, they roll back salaries to avoid layoffs. To stay afloat, Tracy Johnson, the owner of Calgary’s Atlantic Trap and Gill, took a 50 per cent pay cut this year. Her sister took a 15 per cent cut.

The real savings for the city will be found in fighting for a 5 per cent wage rollback across the board in union negotiations. The Canadian Taxpayers Federation estimates that reducing all city employee compensation by 5 per cent would save over $119 million in 2017 and would amount to a 2.57 per cent property tax cut. Not a lessened increase – an actual tax cut.

Mayor Nenshi and councillors can set the tone for restraint by rolling back their own salaries first. Calgary’s mayor is the highest paid in the country.

With a reduction of 10 per cent, Mayor Nenshi would still make $196,456. With a 5 per cent cut, councillors would bring in $110,497. Both would still enjoy generous benefits and perks.

3)    Scrap gold-plated pensions for city employees

Alberta’s MLAs set a good example by cutting their salaries by 5 per cent last year. But they also scrapped their rich, defined-benefit pensions in the 1990s. MLAs now have RRSP-style accounts, which are more commonplace for workers outside of government. Gold-plated pensions for city employees should be reformed on a go-forward basis.

4)    Eliminate forced spending on public art projects

Calgary has a policy that makes taxpayers purchase public art (up to $4 million per project) every time a major piece of infrastructure is built – whether it makes sense to buy a big piece of art or not.

When families are struggling to pay the bills, they don’t commission a mural on their wall. The city can support art without a policy forcing spending on giant blue rings every time we build infrastructure.

5)    Sell city golf courses

It’s great that the city is looking into contracting out the maintenance of city golf courses to private vendors. But why is the city in the golf course business at all? Subsidizing rounds of golf isn’t high on the list of necessary government services.

Those are just a few ideas for they Calgary’s government to tighten its belt. Spending reductions do require tough decisions, but don’t have to require dramatic cuts to necessary services. It’s time for Calgary’s mayor and council to cut spending, so they can cut property taxes and provide some relief to struggling Calgarians.

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commented 2016-06-28 03:06:31 -0400
So tired of hearing growth as a reason for raising taxes, growth means more taxpayers,so it should not have an affect.
commented 2016-06-27 13:13:38 -0400
As I write this, city council is hearing that the total cost of CalgaryNEXT and west village creosote cleanup is $1.3 billion. Where is Dr. NO when we need him?
commented 2016-06-27 12:55:33 -0400
Further to Mc. Macpherson’s point (1), she is actually describing an architectural approach to service delivery. First, define the outcomes you want to achieve. That sets the “scope” of the services you want to delivery. Then define how you will measure the success of those outcomes. Then define the levels that service will be delivered at. And finally cost out what you have created and adjust the service levels to hit your budget price.
For a really simple example: the city will pick up my garbage (scope). They will do this on a weekly basis (service level). The cost will be $xx per month. If that cost is too high, adjust the service level accordingly (ie. bi-weekly pickup to halve the operating costs).
All too often the city tries to link cost with scope to scare people (police budget cut = less boots on the street), where the answer should be (police budget cut = 10 more minutes for non-emergency response times).
commented 2016-06-27 12:39:19 -0400
The reason council gives for the tax hikes is that they are due to inflation and growth.
For inflation, any budgets that administration brings forward should be at the same cost (or lower) as the previous budget. If their costs have increased, then find savings somewhere without compromising service quality. That’s what business has to do. Government should do the same.
For growth, I maintain that at a given tax rate growth is self-funding. If I have 5,000 new houses, that’s 5,000 more houses paying property taxes that support the fire, police and roadwork operating costs that those houses will consume. And remember, any net-new infrastructure that those houses require should either be baked into their original development costs, or added as a time-limited “local improvement fee” to their property tax bills.
commented 2016-06-27 12:28:07 -0400
Couldn’t agree more Bill. I’ve been advocating for his removal/ stepping down since he entered office.
Seems every time he opens his mouth his foot immediately finds it’s way into it, and makes many poor financial decisions for our city. I for one am sick and tired of this fool.
commented 2016-06-27 12:12:11 -0400
The most effective way to save money and cut taxes is fire Nenshi – as a manager he’s a cruel joke. This is the mistake people make by giving individuals, who are dismal failures at thriving in the private sector, the reigns of public office.