The City of Calgary is forecasting another nine-figure budget surplus this year, expected to be $175 million by year’s end, and that’s raised questions about the reoccurring trend.
The figures were released as part of a second quarter economic and financial update to city councillors Tuesday.
Documents show as of June 30, the city is running a $221 million “favourable operating variance,” but that surplus forecasted to drop to $175 million by the end of the year.
The drop is due in part to spending scheduled later in the year including $28 million to cover a funding gap in the Calgary Police Service budget due to the provincial ban on photo radar.
Les Tocher, the city’s chief financial officer, told councillors the estimated surplus is due to lower-than-budgeted corporate contingencies, but it’s mostly driven by higher interest income and one-time gains earned from rebalancing the city’s investment portfolio.
“When we rebalance our accounts, that would create a capital gain. It’s a one-time gain, it’s not reoccurring,” he said.
This year’s projection follows a trend of reported surpluses by the City of Calgary in recent years including $276.3 million last year, $236.4 million in 2023 and $258.7 million in 2022.
A recent report detailing the history of the city’s surpluses showed the city has reported an average surplus of $158 million over the last 10 years, with each exceeding $140 million since 2019.
Calgary Mayor Jyoti Gondek said the repeated surpluses are due to overly conservative and cautious revenue estimates from city administration and not over-taxation.
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“One thing we have not done well is give people certainty and predictability based on strong forecasting models, and that is something I have asked finance to fix,” Gondek told reporters. “They have to come in with a proper forecast so that when we set the budget, we know exactly how much is needed.”
However, provincial legislation mandates that municipalities in Alberta cannot run surpluses or deficits by year’s end.
“It has to be allocated,” said Lindsay Tedds, a professor at the University of Calgary’s department of economics.
“It can’t be spent willy-nilly.”
Calgary’s projected surplus in 2025 is equivalent to $110 per Calgary taxpayer, according to city administrative officer David Duckworth, but a property tax rebate appears highly unlikely and hard to do.
“It would probably cost more just to administer,” Ward 13 Coun. Dan McLean said. “Even though it would be a nice gesture for the taxpayer, a nicer gesture would be to not raise taxes.”
Some on council feel it’s a premature argument without knowing what the budget will look like for next year.
Gondek said some of the excess revenue should be spent on one-time projects, like critical repairs to infrastructure, pointing to council approving of $25 million of the surplus back in June.
“It’s a balance that council has to strike to make sure that Calgarians are getting the services they deserve and the amenities that they deserve, and they can count on us to have infrastructure maintenance happening when we set the budget,” she said.
Ward 10 Coun. Andre Chabot downplayed the size of the surplus, noting it represents around two per cent of the city budget.
He said he hopes to see some funding allocated to a special reserve, which has been drawn down by council over the years.
“We have to be cautious about how we allocate those funds to make sure that it doesn’t impact our credit rating,” Chabot told reporters. “If it impacts our credit rating, then the costs would go up significantly in regards to the servicing costs of our debt.”
Budget deliberations are scheduled in November and will be debated by the next city council, to be elected on Oct. 20, 2025.
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