Unless Calgary makes major financial changes on taxes or developer payments, it can’t afford to handle 40,000 new Calgarians arriving every year — an influx city officials warn council must prepare for in coming budget years.

Calgary will release its 2015-2018 budget next Tuesday. It comes with target tax hikes of 4.7 per cent a year for four years, and was based on annual population growth of 25,000.

As city staff crafted that budget, the latest census said Calgary grew by a record 38,508 people this year, and city hall executives believe that could be the new normal.

It’s a new normal that means the city must release and prepare empty fields and redevelopment areas more quickly, and figure out a new way to pay for it all. Because the emerging patchwork system of deals with suburban developers isn’t working, city manager Jeff Fielding said.

Even if the city leans on a new deal with developers to pay more for roads, fire halls and buses for new Calgarians, that doesn’t cover day-to-day operations, which property taxes pay for. Extra costs and debt charges under a high-growth scenario will create a $15-million budget gap in 2015 — which amounts to more than an extra one per cent in property taxes. That figure grows to $50 million by 2018, council was told Monday.

Without reform of some kind, services will suffer for existing Calgarians as departments stretch to handle newcomers, Fielding said.

“You’ve asked us in the past to eat the cost of growth in our operating budget. We can’t do it any longer,” he told councillors at a strategic meeting.

That gap comes on top of a $50-million shortfall the finance department had to erase within department plans under the current tax and budget targets, chief financial officer Eric Sawyer said. More rapid growth “drives us further into the hole.”

Mayor Naheed Nenshi predicted the city can avoid raising taxes further for next year.

“We can probably work within that parameter without having to go straight to the property tax base, but it starts to get ugly in years future,” he said.

By 2016, in the middle of that four-year civic plan, Premier Jim Prentice has promised a new fiscal framework as part of charters for Edmonton and Calgary. Nenshi is hoping for surer money flows to pay for growth infrastructure and possibly alternatives to reliance on property tax.

Every new family coming to Calgary in the future will require about $44,000 in city capital costs, from transit and fire trucks to sewer lines, the city says. The city asserts the existing developer levy deal doesn’t cover all those costs and saddles ratepayers with too much debt, and is due for renegotiation soon.

Councillors have urged a series of developer financing agreements that better cover startup expenses so companies can fast-track more suburban growth and meet demand. But Fielding said he wants to end the one-offs that risk deeper public debt and may leave infrastructure overbuilt in some outlying areas and under built in others.

The city’s developer association plans to meet with Fielding and others to begin talking about a new approach after late November’s budget debates.

Now that the problem of rapid growth is better defined, the two sides need to collaborate on solutions, said development consultant David Ford, chair of Urban Land Institute of Alberta.

“Many other cities have gone through these challenges before,” he said.

jmarkusoff@calgaryherald.com