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Council needs to cut spending and scale back golden benefits

April 27, 2019
Council needs to cut spending and scale back golden benefits

Calgary businesses and households have had to make tough decisions, now it’s city council’s turn.

Instead of cutting back during the downturn, the city’s operating budget grew by over $500 million from 2015 to 2018. This increase followed years of runaway spending. The Calgary Chamber of Commerce has pointed out that the city would have spent billions of dollars less between 2008 and 2016 if spending stayed in line with inflation plus population growth.

Fortunately, there are some councillors who see the need for cuts.

“All options have to be on the table here. We can’t keep taxing more in times like this,” councillor Diane Colley-Urquhart said. Colley-Urquhart is bringing a notice of motion to the April 29 council meeting, directing administration to return in the fall with budget cuts, including potential job cuts.

While it’s never easy to recommend job cuts, it’s also unfair to make struggling households and businesses pay for higher city labour costs.

According to the city’s annual reports, the cost of “salaries, wages and benefits” has increased by nearly 20 per cent from 2013 to 2017. The job situation outside of government isn’t as pretty. At nearly 8 per cent, Calgary’s unemployment rate remains the highest of Canada’s major cities and total workers’ pay in the province has declined by 9 per cent since 2014 highs.

Councillor Jeromy Farkas also deserves kudos for fighting to scale back city hall’s pensions. With talks of potential job losses, isn’t now the perfect time for councillors to lead by example and scale back their golden benefits?

Farkas’ key proposal to transition city council to a pension model that mirrors Edmonton’s defined contribution system is less risky for taxpayers and still provides councillors with good benefits.

Between 2007 and 2016, Calgary council’s pensions cost taxpayers more than Vancouver, Edmonton and Ottawa combined. The big issue with Calgary’s defined benefit plan is that taxpayers are required to cover pension plan shortfalls. Between 2011 and 2013, taxpayers had to contribute $1.6 million towards council pensions. Unless the defined benefit structure is changed, Calgary taxpayers could be forced to fund another bailout in the future.

It’s important to remember that most Albertans outside of government don’t receive a workplace pension at all, and those that do are unlikely to receive a similar plan as Calgary councillors currently receive.

Farkas’ proposal to scrap the mayor’s second pension is a no-brainer. The mayor’s second pension is fully funded by taxpayers and isn’t available to mayors in other major Canadian cities.

Some councillors may push back on Farkas and argue that councillor pay should be set by an independent committee. But let’s not forget that council rejected a key recommendation from the last independent committee – eliminate council’s transition payments.

If councillors agrees to Farkas’ recommendations, they will be taking a large step towards showing Calgarians they are willing to share in the tough times. After scaling back their own benefits, council will also be better-positioned to address the golden perks received by city employees. There are over 200 employees set to receive three pensions, hundreds more eligible for double pensions and many who receive good-bye bonuses that average $10,000 a pop. These extra perks should all be eliminated.

City council needs to make some tough decisions and cut spending. Taxpayers need to make this decision easier by emailing councillors and letting them know it’s time for spending cuts and a benefits-system that better resemble what the rest of us receive.

After all, taxpayers have already been making tough decisions for years.

This column was published in the Calgary Sun on April 27, 2019.

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