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It is high time city council and administration provided taxpayers with a clear explanation of the city’s finances and the results of its yearly operations.
Mayor Jyoti Gondek recently stated: “We would not have had to increase property taxes for Calgarians at all if we had the support from both the provincial and federal governments that we needed.”
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The city’s chief financial officer, Carla Male, also recently advised council that the city had a $238-million operating surplus last year. “In 2023, we worked hard to deliver results and make life better for Calgarians,” she said.
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Male has indicated the city will now tap into its previously undisclosed working capital of $818 million to help pay for the new arena deal.
What is going on here?
The city’s recently released 2023 audited financial statements are more than 50 pages in length, so it is easy to get lost in the details, but Calgarians will understand a few things — cash deposits on hand and marketable securities.
The city’s cash deposits at the end of 2023 were $1.1 billion, compared to $633 million at the end of 2020. So, an increase of about $470 million in three years.
Besides cash deposits, the city’s 2023 financial statements report a portfolio of marketable securities owned by the city with a fair value of $5.76 billion, an increase of more than $1.1 billion since Dec. 31, 2020.
The city might say it needs large balances of cash and marketable securities since it has set aside various reserves as part of prudent financial planning. The city’s statements do, indeed, identify four different operating reserves, 10 capital reserves and 10 sustainment reserves, totalling $4 billion, including a fiscal stability reserve of $876 million.
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The concept of setting aside something for a rainy day is understandable, but is it truly necessary to backstop those 24 reserves totalling $4 billion with cash and marketable securities of more than $6.8 billion? Is an excess of $2.8 billion reasonable when taxpayers are being hit with higher taxes each year?
Male refers to a $238-million operating surplus for 2023 but fails to mention the city’s statements also report an “excess (deficit) of revenues before other contributions and transfers.” That can be thought of as an operating surplus or “profit,” after paying for the essential services we expect from the city, including the Calgary Police Service, Calgary Fire Department, Public Transit, water and waste services.
The city’s “excess revenues” in 2022, 2021 and 2020, were $361 million, $269 million and $332 million, respectively. Despite an increase in 2023 of about $200 million in “net taxes available for municipal purposes” (from $2.406 billion in 2022 to $2.608 billion in 2023), the city now reports it had an excess of revenues after expenses for last year of “negative” $52 million.
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How is it conceivable the town’s profusion revenues declined from $361 million in 2022 to unfavorable $52 million in 2023, given a $200-million building up in internet taxes? Possibly it had one thing to do with the town’s spending behavior.
Generation the town’s price range for bills in 2023 used to be $4.12 billion, it controlled to incur bills of $4.65 billion. In alternative phrases, it exceeded its price range for bills by way of about $530 million. The ones bills in 2023 had been $314 million upper than in 2022.
Can council or management provide an explanation for why that used to be allowed to occur?
One wonders if the town may be very unholy at making ready budgets or, on the other hand, nobody is taking note of the cash being spent all over the generation. Neither of the ones chances is reassuring to taxpayers.
Taxpayers at the moment are coping with compounding tax will increase of three.9 in line with cent in 2022, 3.7 in line with cent in 2023 and eight.6 in line with cent in 2024; to be adopted by way of in the past introduced will increase of five.5 in line with cent in 2025 and 5 in line with cent in 2026.
Within the intervening time, we’re left to simply accept Male’s pledge that town management is operating dehydrated to assemble past higher for Calgarians.
Jim Williams has practised as a corporate-commercial and tax legal professional in Calgary for greater than 40 years and may be a chartered skilled accountant.
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