How would you like it if the government doubled taxes over a single year on your struggling business and then used those funds to subsidize your competitors? This is what the City of Calgary has been doing for years as they have raised business property taxes by as much as 400 per cent in some cases while tossing $100 million to Calgary Economic Development (CED) to use as a corporate welfare fund to try and draw new businesses to the city. .Business organizations, economists and taxpayer groups have been warning Calgary city council for decades that their high-spending habits coupled with a dependence on business taxation are unsustainable. Through a combination of cowardice, terrible leadership and outright incompetence, city council kicked this can down the road until it erupted into a business tax catastrophe last spring..Local business owner, Kelly Doody, organized a rally of Calgary entrepreneurs outside of Calgary city hall last June. Hundreds attended and demanded answers. .In a panic, council members scrambled to find a solution. Ten of them brought forward a plan which called for $131 million to come from savings and modest spending cuts in order to provide short term tax relief to business owners. Mayor Nenshi, of course, opposed this plan, which was admittedly a Band-Aid solution covering a bigger problem..Kelly Doody is again speaking up. Her business appealed the absurd tax increase imposed upon it by city hall – and won. That took four months of effort, however, and she still saw a large tax increase to add to a $7,000 legal bill. This appeal also meant that her business got no part of the one-time tax relief package. .The City of Calgary hits businesses at a property tax rate five times higher than residential rates. For decades, city councils have been spoiled by energy companies in downtown Calgary who have essentially been overpaying in taxes. With the flight of these energy companies, we are left with a gross spending problem and a tax imbalance neither of which the current Mayor nor city council have the courage to deal with.. Mayor Naheed NenshiCalgay Mayor Naheed Nenshi (source: Wiki Commons) .Spending cuts won’t be easy, but there is one large piece of low hanging fruit that the city can pluck to save money: the pool of patronage and waste is called Calgary Economic Development..In a huge slap in the face to struggling Calgary businesses, Calgary city hall gave $100 million dollars to CED so that they may offer corporate welfare to outside investors who may choose to locate their enterprises in Calgary. What a feeling it must be to have to lay off employees in order to pay tax increases only to have the city dole out those funds to other businesses, often competitors..Calgary Economic Development is not a business organization. They are simply a branch of Calgary city hall and their record in guiding or encouraging economic development in Calgary is nothing less than abysmal. CED was formed in 1999 and under its watch we have seen Calgary’s downtown business core reach a vacancy rate of nearly 30 per cent. I understand that this was due to a flight of energy capital from the province, but CED’s mandate for the last 20 years has been to diversify the city economy so that precisely such an event doesn’t happen. They failed..Let’s look at Mary Moran who was appointed to lead Calgary Economic Development. You may remember her name from when she took a 5-month leave from CED for a salary of nearly $300,000 per year in order to lead the $30 million dollar Calgary Olympic Bidco to a crushing rejection at the hands of tired Calgary taxpayers in last year’s plebiscite. While Moran was on leave to promote Nenshi’s Olympic vanity project, Steve Allen sat at the head of CED. Allan’s name may sound familiar as he is currently immersed in a nepotism scandal where he appears to have handed a nearly million-dollar sole-sourced contract to a law firm where his son is a partner only 11 days after having been appointed to head a commission by Jason Kenney..There is a sub-industry of government organizations where the well-connected find themselves appointed to cushy six-figure jobs without any real accountability. Calgary Economic Development is one of those organizations. It seems the most noteworthy effort of Moran in recent years was the campaign to promote Calgary in Seattle in hopes of drawing Amazon to the city by putting out cute sidewalk chalk ads. It failed, of course, but some folks had a fun expense-paid trip to Seattle where they could play with chalk, so perhaps it was worth it..The great travel opportunities are one of the best benefits of being appointed to a Calgary Economic Development role. In their annual statement – which shares next to nothing on how they spend their millions in tax dollars – they do like to brag about all the places they have flown to in order to ineffectually draw enterprise to Calgary..Hell, CED even appointed Jason Ribeiro to a “Director of Strategy” role within their organization. Ribeiro dedicated months to act as a social media attack dog for the failed Olympic bid last year. He constantly liked to point out how he was simply a volunteer. It looks like his volunteer work led to a nice position in the long run though. It can be lucrative doing side-gigs for folks such as Ms. Moran..It is tough digging through the City of Calgary documents to figure out just how much Calgary Economic Development costs and what they do with that money. They do spend well over $5 million in salaries. On top of that, they spend over $7.5 million on contracted services..One expense that stood out to me is that the $326,000 spent on interest charges in 2017..As of 2017, Calgary Economic Development was carrying $12 million in debt. Already receiving tens of millions in tax dollars, why are they borrowing money?. Trudeau on WE scandal: Case closed .Calgary is a city with a reputation for beating up on its businesses with massive tax increases while wasting the money gathered from these tax grabs. No cute chalk drawings on sidewalks or personal delivery of flashy brochures to nice international destinations by Calgary Economic Development folks will counter that reputation..To draw diverse enterprise and investment to Calgary, the city needs to demonstrate stability and a reasonable tax regime. Right now Calgary is demonstrating neither. Who on earth would want to set up shop in a city that punishes its local businesses as Calgary does?.There are countless areas where the city can find efficiency and cut spending in order to provide tax relief to local businesses. In getting rid of Calgary Economic Development, the city can save tens of millions while ridding itself of an organization that uses tax dollars to create competitors to existing local businesses that are struggling to simply remain in existence. CED hasn’t yet frittered away the entire $100 million tax dollars they were given. Take what’s left back from them and apply it to immediate tax relief for businesses.Calgary needs a whole new culture and attitude along with spending and tax cuts. The city needs to look at its existing businesses as assets to be protected rather than tax cows to be milked in order to feed their myriad of wasteful organizations such as Calgary Economic Development.
