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Like Robin Hood in reverse

Pauline Kerr
3/23/2005

Does anyone remember the term “revenue neutral”, or the “tool kit” that was supposed to allow municipalities to balance their books after restructuring?

A decade later, it is apparent the vaunted “tool kit” has a few screws loose, or missing altogether, and the “revenue neutral” exchange of services is anything but.

Municipalities have seen their expenses skyrocket as the province continues to mandate services which municipalities are legally obliged to provide.

At the same time, municipalities have had to deal with the same issues that affect any other enterprise - rising costs for electricity and fuel, plus wage increases, to name only a few.
Some municipalities went into restructuring and amalgamations kicking and screaming. Others accepted the statement by the Harris government that “the status quo was not an option” and moved ahead as best they could.

Many of the amalgamated municipalities succeeded, at least initially, in maintaining services while keeping tax increases minimal by tapping into reserves and postponing major infrastructure projects. Fees were established for services once provided free, and those fees are increasing at an alarming rate.
Amalgamations meant surplus municipal buildings, many of which have been sold off, helping to alleviate the financial crunch at least for a time.

 
 
Shifting the burden from income onto property taxes is like Robin Hood in reverse. Property taxes just go up, with the burden falling heaviest on retired people with fixed incomes, farmers whose earnings have been negligible over the past couple of years, and small businesses that are struggling to remain in operation.

 
 


There were some initial expectations that the overall number of staff could be reduced, but the new municipalities discovered “economies of scale” does not run to human resources. A larger, more complex political unit takes more, and in some cases better qualified and more highly paid personnel - both employed and elected.

These days that catch phrase “economies of scale” has been replaced by “bigger is not necessarily better”.
Small, rural municipalities may have been melded together, but the fact is, they are still not bulk-buying graders and snow plows.

At this point the dust has settled on amalgamation. Municipalities are starting to understand just how much was downloaded and are struggling to keep taxes in line while providing necessary services.
Those services are starting to include the roads and bridges that will soon have to be closed if they are not repaired or replaced.

Downloading onto the municipalities may have got the province out of a tight spot but is proving to be a remarkably short-sighted solution that is hurting small business and discouraging development.

While federal and provincial taxes are based on income, municipal taxes are property-based. In theory at least, the bite of paying more income tax is eased by the higher income.

Shifting the burden from income onto property taxes is like Robin Hood in reverse. Property taxes just go up, with the burden falling heaviest on retired people with fixed incomes, farmers whose earnings have been negligible over the past couple of years, and small businesses that are struggling to remain in operation. And increasing fees for services like planning effectively strangles development - no increased assessment to spread out the tax burden.

Our cities are saying they can no longer handle provincial downloading and that they need a huge injection of cash to keep their infrastructure viable. The same is true of rural municipalities, if not more so.

The federal government is saying it has no cash to give the provinces.

The province is saying it has no cash to give the counties.

Huron County is looking at an 18 per cent increase, of which 14 per cent is in mandated services.
All that we, the taxpayers, know is that we pay a lot of income tax and our property taxes are entering the stratosphere.

Canadians just spent $130 million - that we know of - to find two people not guilty of the Air India bombing. No one knows how much the Gomery Inquiry will end up costing in addition to the original sponsorship mess. Then there is the $2 billion fiasco called the gun registry.

The thought comes to mind that $2 billion would fix a lot of bridges and roads, with a hefty chunk left over for training new doctors.

The thought also comes to mind that taxpayers are also voters.

                                                         
The Wingham Advance-Times


 

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