(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.