Calgary city council votes to freeze taxes in 2017

Calgary city council has voted to freeze property taxes in 2017.

The motion, put forward by Coun. Ward Sutherland, actually calls for a 1.5 per cent tax increase, but that will be covered by a one-time withdrawal of approximately $22.5 millionfrom the city's Fiscal StabilityReserve (FSR).

The FSR, sitting at $370 million,is the city's main contingency fund, andone of several reserve accounts managed by the city.

Pulling money out of that account in order to fund a zero per cent tax increase is a one-time only solution and administration warned the move will putpressure on taxes in 2018.Permanent solutions should be found, it said in areport to council.

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Service cuts

Mayor Naheed Nenshi said he was comfortable with that pressure, called a Bow Wave, despite speaking against it in the past.

"The reason I'm satisfied with this is the Bow Wave is quite small, 1.5 per cent, lower than our usual annual operating surplus," he said.

City staff recommended that council not dip below a 1.5 per cent increase as it "materially" increases risks.

There will be repercussions from the freeze, with some service cuts to be determined in the fall.

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"Council was comfortable that there were some things around a little less mowing of low-use playfields, for example, or a slightly smaller growth in the number of hours of Calgary Transit, that sort of thing, in order to get there," said Nenshi.

"And we'll have a good opportunity to actually debate those service cuts one at a time when they come to us in the autumn."

He said he doesn't imagine there will be any layoffs.

User fees

Also approved on Monday was making the 2016 freeze on user fees and transit fares"permanent."

But that might not mean what you think it means, becausefees are still going up, just maybe not as quickly as they would have.

Shortfalls from any losseswill be funded through the "tax room" money that was taken by the cityin 2012.

That money was takenwhen the province reduced its tax rate, leaving space for the city to increase its take without technically increasing the tax burden on Calgarians.

The "tax room" moneyavailable to council is approximately $10 million.

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