For a number of years Calgary’s Mayors have been complaining
about the lack of funding from the Province. This issue has been the constant
mantra of both Mayor Bronconnier and Mayor Nenshi. Their argument stems from
the fact that approximately 40% of the property tax collected in the city goes
to the provincial education portion.
Their argument, on the face of it, seems to be fairly
simple; if the province vacated the education tax, Calgary would be entitled to
100% of the property tax collected in the City. Hence Calgary would be able to
provide more services or infrastructure for the benefit of its citizens.
Creditable argument, one would agree.
However there is more to this argument than meets the eye.
Over the years both the current Mayor and his predecessor have made no attempt
at cutting or even controlling rising costs. Instead they have continued to
obfuscate the financial issues by implementing bogus budget systems which have
no transparency.
First it was the three year budget. This process was nothing
more than a business plan with tax increases for three years. The budget,
unlike previous years was subject to public participation only in the first
year. The following two years’ budgets were summarily discussed by only members
of Council. To that effect Calgarians have seen no change in the proposed
taxes, despite changes in the economy.
Enter Mayor Nenshi, a former ‘non-profit finance’ lecturer,
who promised change. He puts into place another City designed budget system
called ‘zero-based-reviews’, which promises to give Calgarians what they
‘want’. Problem is that this system coupled with the ‘Municipal Price Index’ is
once again not transparent, and results in no real savings that can be vetted
by Calgarians. Instead any ‘savings’ are quickly spent somewhere else.
In addition when the Province decides to return the
education portion of the tax collected, the amounts are quickly appropriated
and spent. This appropriation causes the true rate of property tax for 2013, to
be 13%, another double digit tax just like the previous year.
In the midst of an outcry by both the media and the public,
Mayor Nenshi, instead of returning the money to Calgarians in the form of a tax
reduction, decides to have a bogus public consultation in the form of a popular
TV show’. He invites one of the show’s hosts to chair a discussion among
himself and other Aldermen to decide how the $52 million given back by the
province should be spent.
Among the proposals are:
Money for transit, reduction of the business tax, revitalization
of communities, reduction of the debt, and lastly give it back to Calgarians.
Therein lays the management problem. Do we need a gimmick to make an important
decision? One would have thought that the great business plan or ‘zero-base-
review’ process would have a priority list which Council could use without any
organized publicity stunt masquerading as a public consultation.
The Mayor agrees that $52 million while not a large
percentage of the City’s budget, ‘it is a lot of money’. Money I might add came
from the taxpayers’ pocket and in all fairness should be returned in the form
of a tax reduction and not further spending. By the way this money must be used
for capital and not operating expenses. What we must consider is that any
capital expenditure will generate future operating expenses; resulting into future tax increases
because Council refuses to look at
alternative ways of delivering services.
This so called windfall sheds a new light on the discussions
for a new City Charter. When mayors ask for more power, it will result in only
one thing – the ability to tax. While Calgarians have been let to believe that
more money from the province will reduce their taxes, they must think very
carefully before they agree to more powers of taxation. In addition the new
four year term for Council may generate a four year budget, which may result in
no public consultation for three years.
Since, in recent past, Council has not adjusted proposed tax
rates to reflect economic realities, Calgarians will only face tax increases
instead of good financial management.
With more powers
there will be no reasons for any cost cutting, but further excuses for
‘investing’ citizens’ money. Calgarians should beware what they wish for.
Marcel Latouche
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