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Calgary has picked up the tab for $1.05 billion of downloaded costs from other levels of government in the past decade, a new city report estimates.
The report finds Calgary’s expenses are outpacing its revenue growth, as more responsibilities were pushed onto the city by the provincial and federal governments since 2016, without enough funding to cover the costs.
Looking ahead, city officials project Calgary will need to spend another $145 million on downloaded costs in next year’s budget, which Ward 4 Coun. DJ Kelly said roughly equates to a six-per-cent tax increase.
With the report finding downloaded costs are typically coming from the province, Kelly said council is advocating for more support.
“We need the provincial government to wake up and realize the changes that they’re making results in a downloading of costs to the City of Calgary,” said Kelly.
“We really hope that they step up, work with us closely in order to be able to close those gaps, and make sure that we’re delivering the services that Calgarians, who are indeed Albertans, are demanding.”
Ward 4 Coun. DJ Kelly is calling for more support from the province to help the city cover costs downloaded onto it from other levels of government. (CBC)
The downloaded costs the report points to are services it says the province does not properly fund, like income support, requiring the city to spend more to keep programs running. It also pointed to legal and policy changes that either create new costs for the city, or cut its funding.
Kelly introduced the motion requesting the report earlier this year, which is an annual update on the municipal fiscal gap. It followed council directing letters be sent to the province last fall about how the gap widened by $28 million annually after the province scaled back photo radar.
Along with rising costs, the report argues the education property tax hike Calgary received in this year’s provincial budget leaves less flexibility for the city to increase its revenue without worsening the tax burden on residents.
WATCH | Calgary paid more than $1 billion in downloaded costs in last decade:
Province downloaded $1B in costs to Calgary over last decade: report
The City of Calgary says the Alberta government is offloading a growing number of costs and responsibilities, leaving municipalities to pick up the tab. A new city report says the province has downloaded a billion dollars in costs onto the city over the last decade.
The report does not include an itemized list detailing how it reached its $1.05 billion estimate. But it did point to specific examples of downloaded costs, including lost revenue from the province scaling back photo radar, the city covering the low-income transit pass, as well as legislation like Bill 20, which created new costs to run local elections.
The city’s report says $1.05 billion is a conservative estimate, because it omits indirect impacts that are difficult to quantify, like if more emergency services were needed after the province’s photo radar cuts.
The province is committed to working with Calgary on practical, long-term solutions, said Ministry of Municipal Affairs press secretary Jack Alarie. He said the province understands the pressures municipalities face from population growth, aging infrastructure and rising service costs.
“The province faces the same fiscal pressures and has planned its finances accordingly,” said Alarie via email.
“Municipalities are responsible for their own financial planning, including the maintenance of their infrastructure and the delivery of core services within their budgets.”
Municipalities across province feeling same pressure
Calgary isn’t alone in feeling the pinch of downloaded costs, said Alberta Municipalities president Dylan Bressey.
“We’ve seen successive governments over a period of about 10 years make dozens and dozens of decisions that have increased our costs while also decreasing our revenue,” said Bressey.
“Each of these decisions on their own has reason behind them, and might actually be a good decision in isolation. But the cumulative impact of them is that we are putting municipalities under a huge financial crunch.”
Capital funding the province transfers to Calgary has not kept up with inflation and recent rapid population growth, the report finds, leading to a decline in per-capita funding in recent years. Alberta Municipalities has advocated for years for the province to increase the capital it provides municipalities.
Bressey said that while provincial and federal counterparts often acknowledge the added pressure municipalities feel, he would like to see more action. Local governments need support to fund infrastructure, like roads and pipes, especially if other levels of government are prioritizing building more housing, he added.
After not investing enough in these areas for decades, Bressey said the bill is coming due.
“It really is this perfect storm of a growing population, more expensive regulations and degrading infrastructure putting huge pressure on the financial viability of municipalities,” said Bressey.