Revenue from Local Access Fees Declines, According to Annual Financial Report

Revenue from Local Access Fees Declines, According to Annual Financial Report: Calgary City Hall In 2024, the City of Calgary posted a budget surplus of $276 million, an increase of $40 million from the previous year's surplus of $236 million, despite facing unforeseen financial challenges, including the significant Bearspaw South feeder main break last summer.

This positive outcome was detailed in a corporate annual financial report presented to the city council's audit committee on Thursday. The report credits the surplus mainly to "higher franchise fee revenue resulting from elevated energy prices, increased investment income, and expenditure reductions across various tax-supported services." City administration has suggested allocating the operating surplus to the fiscal stability reserve, often referred to as the "rainy day fund." Decline in Local Access Fees: Last year, the city collected around $182 million in local access fees, a decrease from over $308 million in 2023. This year, the city anticipates further revenue decline from this fee due to a change in its calculation method aimed at addressing affordability concerns and rising utility costs.
 
The local access fee, also known as a franchise fee, is charged instead of property taxes for running power infrastructure within the city. Calgary residents currently pay higher access fees compared to other Albertans, as the regulated rates continue to rise. The city's additional fee on electricity is projected to exceed $200 million in revenue again. This year, the calculation switched from being linked to the province's "rate of last resort" to a consumption-based model that charges customers based on their electricity usage. Following years of substantial profits, Councillor Andre Chabot stated that 2024 would likely be the final year for significant gains from this fee. During the meeting, he emphasized the need to find alternative revenue sources to compensate for this expected loss, given that some of the surplus supports the city's reserve for upcoming capital projects. "We've adjusted our formula, and it will be revised again once we finalize the structure," said Chabot. "We may need to reassess the reserve for future capital contributions since there will be a growing demand to supplement that." Surplus and Rising Property Taxes?: Although Calgarians are facing a property tax increase despite the surplus, Councillor Evan Spencer, who chairs the audit committee, argued that Calgary is not overtaxing its residents. "We're not immune to inflation or market fluctuations, and we've encountered various challenges as the City of Calgary," Spencer stated. "Thus, I do not believe the City of Calgary is overtaxing homeowners in any way." Chabot, however, noted that some residents might view the situation differently. He is advocating for a $60 million investment from the fiscal stability reserve to support the Opportunity Calgary Investment Fund (OCIF), which was established in 2017 to encourage local business growth and attract new enterprises to the city. He presented this motion last week. The city council will review the annual financial report later this month. Corrections: A previous version inaccurately stated the city received $182 thousand in local access fees last year and $308 thousand in 2023. The correct figures are $182 million for last year and $308 million for 2023.
Reporting by CBCNEWS