Macdonald: Could the Charter be a Trojan Horse?

CommonSenseIcon.png How much do you know about the City Charters? Do you know what the financial consequences will be? Why are the elected officials so slow in providing information on the financial implications of the Charter? Truth and reality seem elusive when it comes to the Charters. Here, Common Sense Calgary presents what could be the real agenda within the City Charter.

Calgary City Council has a problem, they only have one tool to bolster City revenue to support their unsustainable spending: property taxes. Raising taxes is politically unpopular, so different tools to generate revenue are desperately needed in the minds of politicians and bureaucrats in City Hall and the Legislature. Cities can only borrow a certain amount of money - there is a limit, and this limit is set by the Province and is based on how much revenue the City generates, just like an average person who has a borrowing limit based on his or her income level. So what do debt and taxes have to do with the City Charter? As it turns out, well, Common Sense Calgary thinks everything!

We believe that what is NOT being explained is that a NEW power could be granted by the Province to Calgary and possibly Edmonton under a Charter. Both cities may be set to receive the power to create "for-profit" businesses to deliver existing programs and services to citizens. Currently without a Charter, Calgary has to obtain permission from the Province in order to create a "for-profit" business like ENMAX, yet under a new City Charter, no permission from the Province would be required. 

Currently, programs and services like waste and recycling, water and water treatment, planning and development, transit, roads are delivered to citizens at cost. Under a "for-profit" business, these programs and services could likely cost much more. Why you ask? Because these "for-profit" businesses will be required to have a Board of Directors, President, CEO, and high overhead. The profits would be recorded as new revenue for the City. These new businesses could then compete against existing businesses and then in some areas possibly become monopolies. 

But didn't the Mayor say there would be no new taxing powers in the City Charters? The new taxing powers could be disguised as "for-profit" City owned and controlled corporations, with tax revenues coming in through the back door instead of the front door, sort of like a Trojan Horse. Precisely which City programs could be made "for-profit" is a closely guarded secret. The City would be required to consult to create a new "for-profit" business, but the final decision would be with City Council, not the voters or citizens who would have to pay for it. For example, would there be a referendum to turn Calgary's Waste and Recycling Services into a "for-profit" business?

But how does this relate to the City debt you ask? Well, what most Calgarians do not realize is that Calgary is closing in on the maximum debt permitted under the Municipal Government Act and that could constrain future spending plans. For example, the ENMAX debt in The City’s name in 2015 was $1,211,055 from what it was in 2011 when the ENMAX debit in The City's name was $732,877. A significant increase of this debt in five years.

With a freshly minted Charter in hand, the City could massively increase revenues through the profits generated by "for-profit" businesses - this would increase the City debt limit and a higher debt limit means the City could borrow more... and spend more. Is there currently a plan in place to repay the current debt let alone a higher one that could come with a Charter? The debt already carried by Calgary will plague current and future generations and a Charter could only serve to make that debt bigger.

Spending can't be controlled and debt continues to accumulate and so debt limits must be raised to sustain spending. Common Sense asks whether government should run businesses? 

Share this with your friends, and then visit www.seecharterthinktax.ca  or www.commonsensecalgary.com to sign the petition calling on a citywide referendum on the City Charters.

Kathy Macdonald is the Executive Director of Common Sense Calgary.