The big headache for Calgary’s next council: How to pay for a growing city when everyone’s strapped

It’s a problem as old as time for Canadian municipalities: how do you pay the bills when no one wants to pay more?

Calgary’s new-look council will need to find their footing on that question. And they won’t have long to make up their minds.

Last month, the outgoing city council received a preview of the 2026 budget, proposing to spend more to respond to surging growth, and asking existing taxpayers to pay 3.6 per cent more in taxes.

The full budget will land on the desks of the freshly-minted councillors mere weeks after election day.

After the preview was released, departing Ward 14 Coun. Peter Demong, first elected in 2010, offered this candid view of taxation: “Taxes … city taxes, anyway … almost always have to go up.”

It’s perhaps a more blunt assessment than many are used to, considering residents don’t typically respond to year-over-year incremental tax increases with open arms. 

It’s not exactly a vote winner either. A recent poll conducted by Janet Brown Opinion Research for CBC News suggested that keeping residential property taxes low was a top priority for respondents over the next four years. 

Count Ward 2 voter Daphne Zhao among them. Zhao was one of 100 voters CBC News spoke with about their key election issues.

“I hope our city can spend our money wisely,” Zhao said. “Our city grows, and we have a limited budget. We don’t want our property tax increasing every year.”

Ward 2 voter Daphne Zhao wants to see the city spend its money wisely. (Elise Stole/CBC)

In the municipal election set for Oct. 20, some candidates are going so far as to promise a property tax freeze should they win. Others have said fiscal discipline is key to preserving core services. 

What’s a council to do?

Where that money goes

Before we go any further, a quick refresher about what property tax is used for.

Property tax is money the city collects to help pay for services like police, fire and transit. It makes up just under half of the city’s revenue. Approximately 63 per cent of residential property taxes fund city services, while 37 per cent goes to the provincial government to fund public education.

WATCH | Calgary sends $10M invoice to Alberta government over tax collection expenses:

Calgary sends $10M invoice to Alberta government over tax collection expenses

Municipalities in Alberta have been collecting education property taxes on behalf of the provincial government for decades. And the City of Calgary has just sent a $10 million bill to the province to recover administrative costs for collecting those tax dollars. The CBC’s Acton Clarkin reports.

Calgary was heavily dependent on business taxes in years past. But as downtown office vacancies rose, that model collapsed. The result was a steady shift in the tax burden from companies to homeowners.

In 2025, residential properties are now being asked to pay 54 per cent of Calgary’s municipal taxes, compared with 46 per cent for non-residential — a dramatic reversal from two decades ago.

The ‘tricky business’ of who pays more

The argument often made is that the burden on non-residential properties is too big, making it difficult for their owners to create employment, said Ron Kneebone, an economics professor at the University of Calgary and a member of its School of Public Policy.

“If that is true, there are two options. One is to shift taxes onto someone else. That is what people advocating for a tax shift are trying to do,” Kneebone said in an email.

However, Kneebone said that is only an effective argument if someone can show that the benefits of municipal spending have shifted toward owners of residential properties. 

He called that argument “tricky business” — for instance, road and transit systems downtown benefit both downtown businesses as well as employees and customers.

“The other option is to suggest municipal spending — and, so, municipal taxes — is too high, and that we are paying too much in tax for the services we are receiving,” he said.

“So, we can think of candidates as being tax-shifters or tax-cutters. Some might want to do a bit of both.”

Ron Kneebone is a professor at the University of Calgary’s School of Public Policy. He says it’s difficult to determine if Calgarians are getting good value for their taxes and fees, as it would require a detailed comparison to other cities. (Anis Heydari/CBC)

For years, Calgary has taken pride in having some of the lowest property taxes in the country. But Calgary also relies on gathering revenue from other sources, including utility bills and service fees. That makes it difficult to directly compare tax rates across jurisdictions, Kneebone said.

“When you compare property taxes across Canada, Alberta looks low, but our other sources of taxes look high relative to other cities,” Kneebone said.

As for whether Calgarians are getting good value for the money that they spend?

“Well, that’s, in some sense, one of the reasons we have an election,” Kneebone said. “That’s the judgment of the electorate.”

Challenges across jurisdictions

Municipalities across Canada face similar fiscal strains, said Enid Slack, director of the Institute on Municipal Finance and Governance at the University of Toronto.

“There are a lot of things that are new to municipalities that they weren’t doing 100 years ago that are putting a lot of pressure on their expenditures, but there aren’t any new revenue sources to pay for them,” she said. 

Across Canada, municipalities depend heavily on property taxes and user fees as their two main revenue streams. 

Those sources haven’t changed much in a century, even as cities have taken on new and more expensive responsibilities, including climate change, affordable housing, cybersecurity and infrastructure renewal, Slack said.

What the top five polling candidates say

On Thursday, CBC Calgary hosted a debate between five candidates in the race for mayor: Brian Thiessen, Jeff Davison, Jeromy Farkas, Sonya Sharp and incumbent Jyoti Gondek. 

Davison has made a four-year property tax freeze the centerpiece of his platform, arguing it can be done without cutting core services.

“Don’t let anybody tell you a tax freeze is not possible just because they don’t have the experience or knowledge on how to do it,” he said at the debate. 

“You do not create affordability by charging people more money every year. We can manage growth in a better way.”

Other candidates, including Gondek and Thiessen, voiced their opposition to such a plan during the debate.

WATCH | Jyoti Gondek responds to proposal to freeze taxes:

Why Jyoti Gondek doesn’t believe in a tax freeze

Calgary mayoral candidate Jeff Davison is pledging a four-year tax freeze — without cutting core services — as part of his plan to restore fiscal discipline and make life more affordable for Calgarians. Incumbent candidate Jyoti Gondek responds to the proposal.

Kneebone warned: “Squeeze property tax revenues and you are liable to see other sources of revenue increase instead.”

In her platform, Sharp promises to reintroduce a finance and corporate services committee to “scrutinize departmental and business unit budgets in detail and in public, assess whether spending aligns with council’s priorities, and vet any proposed new expenditures.”

Gondek has said she would continue to push back against the provincial government’s approach to the education property tax, currently resulting in 37 per cent of property tax leaving the city. She has called it “neither acceptable nor affordable” for property owners in Calgary.

Thiessen’s The Calgary Party has said it would push for a modern municipal charter that would provide the city with a greater share of the existing property tax currently allocated to the province. 

From left to right, some of the mayoral candidates in the 2025 municipal election in Calgary: Sonya Sharp, Jyoti Gondek, Jeff Davison, Brian Thiessen and Jeromy Farkas. (CBC, Jeff McIntosh/The Canadian Press)

Kneebone said the province’s arrangement represents a form of equalization, as not all communities can afford to spend as much on education as Calgary.

“To avoid seeing poorer education outcomes in some municipalities relative to others, the province takes a share of the education property tax and uses it to ensure all municipalities can offer the same quality of education to children living in those communities as children living in wealthier communities like Calgary,” he said. 

“Maybe 37 per cent is too high — I don’t know — but the principle behind the province taking a share of the education property tax is, I think, sound.”

Finally, Farkas has called for a zero-based budget review, which essentially means justifying all expenses from scratch each budget period. It’s an approach Kneebone said governments use to remind themselves of their core functions and consider whether they have strayed from those.

Slack said property taxes necessarily rise over time, at least to keep pace with inflation.

“If expenditures are rising, either revenues rise or you have to cut back on services. And what often gets cut back on is maintenance,” she said. “A lot of infrastructure is not in a state of good repair … because we haven’t raised the revenues to do that.”

The municipal election is set for Oct. 20.