Calgary's new $191M plan to ease business tax burden losing support

Calgary city council's new plan to help ease the tax burden on business property owners is already losing support. Council is proposing a $191million dollar tax cut contingent on the province chipping in some of that money.

The latest non-residential property tax relief plan includes $70 million from the just-cancelled small business grant program.

• Calgary city council votes down $70M small business grant program

It also includes $60 million in new spending cuts at City Hall and $60 million from the province by way of a reduction in the amount of property tax it takes from the city.

Fourteen of the 15 city councillors areendorsing the plan.

"We're listening," said Coun. Ward Sutherland. "It's been a challenge, but I'm just glad we've come to a resolution."

Coun. Jyoti Gondek said the plan offers a proportional rebate.

"There's immediate relief because people are going to get a proportional rebate based on the increase that they faced," Gondek said.

Province balks, chides city

The plan, which will be debated by council June 17, is far from being resolved.

Premier Jason Kenney says it's not the province's responsibility to subsidize municipal property taxes.

"I wish them well in trying to come up with a solution here, seems to me they're going to have to go through a period of fiscal responsibility," said Kenney.

"The city has to deal with its own fiscal challenges responsibly and we're dealing with ours. One way we are doing that is by giving the biggest tax relief to employers in Alberta history,the one-third reduction in the business tax rate that's going to help Alberta businesses massively."

Alberta's municipal affairs minister appeared to have rejected the plan hours after it was made public.

"The city of Calgary needs to look after its own house. They have hiked operational spending far beyond inflation and population over the last decade," Kaycee Madusaid in a statement to the CBC.

"Council needs to think about where this money has gone and why it has become so reliant on passing its spending hikes onto businesses," he added.

Mayor fires back

Mayor Naheed Nenshi, at the Federation of Canadian Municipalities convention in Quebec City, said in his own statement that the minister is wrong to say the city has hiked spending as high as Madu stated.

"This is not, in fact, true," Nenshi said.

"We responded to the economic downturn by finding over $600 million in savings, with more to come. In fact, total city spending over the last four years has increased by 2 per centless than inflation and population growth (5.68 per centvs. 7.59 per cent, respectively)," said the mayor.

Nenshi says the city has provided $150 million over the past two years to help struggling property owners who are dealing with the so-called 'tax shift.' Lower property values in the downtown core have shifted the tax burden onto businesses located in other areas of the city.

"The challenge we have is one of distribution, not of overall tax or spending levels. In short, some businesses are getting huge tax cuts while others are seeing huge tax increases as a result of the redistribution," he said.

Second relief plan

The lone councillor who didn't sign on to the $191millionplan is pitching his own proposal. Jeromy Farkas wants city managers and staff to voluntarily cut their salaries and wages by five per cent,and 2.5 per centrespectively.

Instead of $60 million in cuts, Farkas is proposing $35 million.

He would also like to withdraw $50 million from the Opportunity Calgary Investment Fund.

• 1st grant from Opportunity Calgary Investment Fund handed out

"So looking to the province in terms of that bailout is a non-starter for me. I think we have to live within our means here at city hall," said Farkas.

"It shouldn't be on provincial taxpayers to bail out a Calgary city council which has for many years mismanaged its finances," he said.

Council will look at both plans next month.

Bryan Labby is an enterprise reporter with CBC Calgary. If you have a good story idea or tip, you can reach him at bryan.labby@cbc.ca or on Twitter at @CBCBryan.