Council recently had the opportunity to review the audited financial statements for The City. This is an annual process that requires Council to approve the statements — before they are submitted to the Province — which oversees all municipalities. These financial statements were for the 2021 fiscal year, and therefore not directly connected to decisions made by this Council, as their term began in October.
We were informed that The City is carrying a non-budgeted surplus from business activities in 2021 to the tune of approximately $147 million. The sources of these additional funds include investment income, property taxes due to a greater number of homes constructed, Enmax earnings due to higher resource prices, sale of land and assets, as well as savings through operating efficiencies. It is important to note that achieving a surplus isn’t an anomaly.
The Municipal Government Act (MGA) in the Province of Alberta does not allow municipalities to run a budget deficit. This forces cities like Calgary to budget with an allowance for surplus, to prevent the possibility of a deficit position. Part of what surpluses are allocated to are several reserve funds that allow The City to respond to major events or opportunities to fund concerns outside of the normal budget process. These include events such as the 2013 flood, 2020 pandemic funding, and initiatives like the Calgary Transit security boost provided in early 2022.
In terms of our current 2022 tax year, this Council passed budget adjustments last fall without the final 2021 figures being made available to them. There was no information presented that inferred there would be a budgetary surplus from the previous year that would allow new spending, without a tax increase. I am making inquiries as to whether this is common practice or if there is a mechanism to provide more recent information regarding current budget positions. It is certainly frustrating to learn there were funds available at the same time we were approving important budget adjustments and a corresponding tax increase.
Now, Council can both acknowledge and plan for a large sum of funds in the form of a budget surplus. It did not take long for calls through social media and letters through my office inbox to “give it back”. This option certainly presents some interesting challenges and I’ll address why it might be difficult to execute at this time. Here are some responses to ideas recently presented to me:
- The first opportunity is that the source of the surplus isn’t specifically property taxes. The City has seven revenue streams, including taxes, and each played a part in the excess funds. Even if we were to focus on the surplus derived from property taxes (approximately $44 million), dividing it up and returning it to taxpayers means about half would go to non-residential tax accounts — leaving $22 million to be split amongst an approximate 540,000 accounts, or an average of $82 each. This is certainly not the windfall that would make a dent on an appreciably significant 2022 tax bill.
- Calls to provide the surplus to low-income families or those in need would face a different, yet equally challenging, opportunity. Unlike other levels of government, The City does not have the visibility into individual incomes or economic positions. Nor does it have a built-in mechanism for producing cheques and distributing funds on an individual basis, as this is not a function of municipal government. Ultimately, we will need to plan for ways to integrate these funds into savings and spending programs.
Councillors have already begun to have discussions as to where these funds should be used. There is no shortage of options that could benefit from additional resources. With an eye on long-term budgeting and fiscal responsibility, we have an opportunity to use these dollars wisely for continued savings and long-term benefits. Investing in operational improvements could mean adding to future budgets to maintain services, so we must be cautious with calls to augment current programs. My preference is for Council to have thorough conversations about our long-term goals, especially at the local level within our wards. Many great needs could be satisfied by micro investments and infrastructure catch-ups to improve mobility and safety.
As always, I appreciate the feedback received through my office at [email protected] and look forward to future discussions about how to make our streets, neighbourhoods, wards, and city even better than it already is.