In a 14-1 vote, Council approved the latest City tax hike this week. The provincial education portion of property tax was increased by 2.9%, and the City’s portion went up a whopping 4.79%, meaning our total tax increase this year comes in at 3.9%.
According to the Statistics Canada Consumer Price Index, the rate of inflation sits around 0.29% for 2009.
What this means is, despite tough economic times, City Council was not willing to cut back, or tighten its belt, and no real effort was made to reduce costs or seek the greatest value for citizens and tax payers. This has a lot to do with the current budget process, and how core services are delivered in Calgary.
The Budget
The budget process was revamped by Council in 2003 from a bottom-up to a top-down system. The result was a new budget system that no longer considers the rate of inflation, and the economic rate of growth is only considered after the desired tax increase.
The new budget process has moved the City in the wrong direction, and away from good economics and prudent financial management. It also comes close to eliminating any discussion or public input.
“The tax rate is set to fulfill the levels of expenditures without much explanation. In the meantime, sound financial concepts are ignored and accountability is the clear loser.”-Marcel Latouche, MBA
What we should be moving towards is a three-year zero based budget (ZBB). In a ZBB every activity is challenged, and programs are re-examined for their relevance. It’s hard to believe, but in the current system, the City’s program expenses are not justified.
Service Delivery
A substantial portion of the City’s budget is devoted to delivering the services that Calgarians need and want. Our current problem is we are not getting the best value for our tax dollars.
The solution to this problem is simple. The City needs to move from its current and unsustainable role as the sole provider of all services, to a more “high-performance” role as contractor of City services.
I’m not talking about privatization, but contestability. Contestability, would open up City services to competitive bidding in which the City would consider the real cost of providing a service itself, and compare that with the cost of contracting that service to local businesses. After the cost of providing city services is known, and compared with other options, City Council can make an informed decision about the best value for our money.
The City would remain in control of the delivery of services, and would monitor all service providers to ensure that core services are being delivered effectively.
The result of contestability will be that we find the City is best able to provide some services, and that local businesses are better able to provide the City with other services. But what can be guaranteed right from the start, is that the City will be sure to get the best value for tax payers.
Contestability is good for business, good for tax payers, and good for citizens. All we need is to elect the Aldermen with the political will to take some bold action.
Link: City tax hike set at 3.9%; average bill goes up $82 (Calgary Herald)
