Property Taxes

Dollars to donuts, one of the main issues in the municipal election is how property taxes affect us. If Business or Commercial rates are too high, they discourage growth, if they are too low, the residents end up carrying the tax burden. The trick for councils is to make everyone happy. They can try to do this is in a number of ways.

Councils can increase user fees, those non-tax charges you pay for services provided by the municipality (many often absorbed in the general rate in prior years). The argument being that you only pay these fees if you use the service; those who do not park downtown do not pay the increased fee. It is hard to argue against that one. The more services a municipality can remove from the general levy, the lower the ‘tax’ rate. However, one might question whether the user fee for renting a playing field actually covers the total cost.

Except in the case of water, which must cover all of its costs through separate accounting (a dictum from above), most user fees do not cover the cost of the service. Increasing user fees or charging a new user fee does however lower the overall tax rate. Fortunately, the practice of pre-charging for water to build up a reserve, is not applied to many other programs (Memorial Gardens and the Capitol Centre being exceptions). This is seen and reported as good budgeting.

Council can also rely on additional assessment to cover their tax increase by spreading the tax base over more properties. If there is little or no growth, then this same result can be obtained by increasing the market value of many or all properties. MPAC, that often maligned organization that sets assessment values, is currently on the carpet for what appears to be sloppy work. Theoretically, if all properties were assessed higher, a lower ‘mill rate’ should be applied to each property to get the same tax revenue, but councils will add the inflationary rise each year because they know people will see that as reasonable.

Thus, councils can easily wash their hands of any increase in your tax rate by pointing to MPAC. Except that MPAC is owned by the municipalities. Somehow, there is no conflict of interest here. Why would municipalities argue against an inflated value system when they need the additional money and can hide their tax increases by blaming MPAC?

Arguments have been made by candidates about tax rates based on examples of a number of individuals whose taxes have either gone up or down in the past three years, depending on whether the candidate is an incumbent or a newcomer. The simple answer is to look at the total tax levied by the municipality in 2002 and in 2006. This information is readily available on the City’s website. It is not difficult to see what percentage the levy increased. You might also look at the amount user fees increased. While you are most likely more concerned with your own tax amount, how the council is performing ought to be judged by the total budget increase.

When you are looking at these figures, you can see the amount of money the municipality received in Grants or Subsidies from other levels of government. One can soon see where the money came from for capital and infrastructure improvements. One might also see how the Reserves were easier to build because of this increased funding.

Another way that councils can keep the tax rate down is to spend less money than they ought to. While the short-term benefit of looking like great money managers may draw voter support, that will soon fade as people see their infrastructure deteriorate and municipal services withdrawn. This is akin to buying into one of those deals where the rate for first three months looks great, paying no attention to what you will be paying for the balance of the contract. It is like getting a parcel of land for a dollar an acre and then wondering why your taxes are so high because someone at MPAC believes in market value. Or if MPAC does not, your neighbour will.

Fortunately, other issues deserve consideration in the run up to Election Day. How well our taxes are spent is always an issue because we all want to see value for our hard-earned dollars. Are the increased taxes spent efficiently or frittered away on legal fees generated by confrontational approaches to problems?

There are also issues of the environment that need attention, not only on the personal level, but on the municipal level. Safety and security are bought and paid for with our taxes, but the manner in which they are delivered has much to do with our sense of well-being. Issues of health and education have to be addressed with more than a tight fist grasping our tax dollar. Employment and poverty are daily issues that need attention and action.

Economic development is always at the top of the list at election time, yet the reality is that in the global village, we are a small player in a somewhat remote area. We are connected to the Centre of the Universe and business reacts in ripples away from that epicentre. In periods of growth, as we have just experienced, our businesses will grow, but in any downturn, we will feel the bite sooner as businesses retrench and consolidate at their bases in the big urban centres.

In the meantime, we must keep our infrastructure sound; our citizens safe and healthy; learning trades and skills that they can some day bring back to our little jewel here in the north. Creating a good business environment will bring jobs - both high and low-paying – to our area.

Sometimes, the bottom line is not the answer to everything. The Quality of Life, now and in the future, is more important. Dollars to donuts.