Calgary homeowners will see 3.45% property tax jump, city council decides

Calgary homeowners already knew their property taxes were going up this year.

Now there's an answer to just how much higher they'll go.

City council approved a 3.45 per cent residential tax increase for 2019. This means a $105 tax increase for the median-priced house of $485,000.

Council voted 8-7to approve the increase, which will be applied to the total property tax bill.

Business owners, however, will see a decrease of about two per cent.

The changeshifted $27 millionin taxes from the business property tax load onto residential customers.

It's a move that, according tosupporting councillors and city staff, will help balance the tax load, as residences historically contributed 45 per cent and businesses 55 per cent of the total property tax revenue.

The decision took quite some time to make. A hike was suggested when the four-year budget was approved last November. Then council delayed the decision again last week.

Mondaywas the deadline.

The tax rate for this year had to be finalized now as the city needs a few weeks to print more than half a million tax notices and get them in the mail. Property taxes are due before the end of June unless landowners are on a monthly instalment plan.

Shifting tax burden to homeowners

Councillors only hadtwo choices on the table as they searched Monday for a way to head off double-digit increases for many business property owners.

With downtown property values remaining depressed, business properties outside the core have been billedhigher taxes.

Council chose toshift some of the business property tax load to residential accounts.

They have accepted a proposal to set up a $70-million grant program to help non-residential property owners with their tax hikes over the next two years. The details of the rebate program will be revealed next month.

"Business located downtown will still see a huge tax decrease this year, by and large, and those outside of the downtown will see about a two per cent decrease overall but also will have the ability to apply to this grant program," Mayor Naheed Nenshi said.

Councillors overwhelmingly rejected a second option toraise residential taxes by a larger amount and then give them a rebate to help them adjust to the increases over the next three years.

Ahead of the vote, Nenshi said he felt "everyone on council agrees we've got to move back to a system where about half of our budget is paid by businesses and half is paid by residents."

Business critique

The Calgary Chamber of Commercesaid the effort to "begin the shift to a fairer, more equitable" tax burden was appreciated but not enough.

Chamber presidentSandipLallisaid council should seek a longer-term solution, which, in the chamber's view, would involve businesses paying a smaller share than residents not the same or more

"It really is situation critical for many businesses that are at risk due to no fault of their own," Lalli said in a statement. "Council had an opportunity to demonstrate leadership on business-forward policies but unfortunately, they came up short today."

She said she worriesthe grant's requirements will be unclear and leave out larger businesses.

Cut spending instead, councillors say

Coun. Jeromy Farkasvoted against the tax hike, saying the city should do more than shiftaround who pays what taxes.

"Unless we get really serious about that salaries, wages, benefits and overtime piece we're not going to be able to make a dent on these tax increases going forward," Farkas said.

"Icouldn't justify moving around the burden without a really serious talk about how we can reduce the burden, not just for homeowners but also the businesses that are struggling."

Coun. Evan Wooleyhad pitched a plan to cut $100 million in expenses but was roundly rejected by his colleagues.

Big picture worries

The mayor said he was disappointed council didn't vote on the 2019 tax rates a week ago. But he's actually more worried about the bigger picture.

"I'm even more disappointed that they didn't choose to set a direction for 2020, '21 and '22 because ultimately the decision on '19, you actually can't make it unless you understand what's going to happen in future years," Nenshi said.

Coun. Jyoti Gondek said she disagreedwith the mayor's assessment that council should have made a longer term decision.

She said the tax requisition for 2020, 2021 and 2022 will depend on finding additional cuts in the budget. Administration has already committed to finding $60 million in reductions.

But she said more cuts are needed and that will take a bit of time to do it right.

"By not setting a rate for 2020, '21 and '22, it allows us the next eight months to find where those service lines are where we think we can make some deep cuts and have an impact for Calgarians," she saidahead of the vote.

She supported therejected bigger tax shift onto residents, along with aresidential rebate program to help Calgarians.

"The party that's taking on more in order to have another party take on less is the one that's suffering. That rebate should go to that party," Gondeksaid.

The city is collecting the same amount of education property tax for the provincial government as last year. A provincial budget was not called before Premier Rachel Notley called an election for April 16.