Thursday, April 27, 2006

It's going to get more expensive to live in London, version 2006.1

Remember the good old days back in January?

[C]ouncil has approved a 2006 budget that raises residential property taxes by 2.95 per cent. After two years of 5.9 and 6.6 per cent increases, this year's hike may appear to be a relief — such are the reduced expectations of Londoners. Property taxes get the big press, but Londoners will be paying 9.6 and 5 per cent increases in sewer and water rates respectively.
Ah, but the much less ballyhooed caveat was that the relatively less onerous increase for homeowners in an election year owed less to a trifling with the idea of fiscal restraint and mostly on the redistribution of the tax burden to commercial properties and the unguaranteed approval of the provincial government.

Well, in April Londoners still face the 9.6 and 5 per cent increases in sewer and water charges. But while city council is scrambling to stem their political vulnerability before this fall's election by pushing for a pesticide ban to appease a small special interest group that receives disproportionate coverage in the local media, ordinary Londoners are getting a few more inches of the shaft. From the London Free Press:
Only three months ago, council patted itself on the back after passing a budget boosting taxes by 2.95 per cent for 2006. Many expected an even lower hike because Queen's Park had yet to declare an education levy expected to reduce rates further. It has done so since. But the low education levy will only soften the blow to London homeowners, who are already among the most heavily taxed in the country.

A city staff report to be presented to politicians today says this year's tax hike will be at least 3.3 per cent and recommends 3.9 per cent. Throw in big jumps to sewer and water surcharges and the average London homeowner could be paying nearly five per cent more than last year.

Why will homeowners be taxed more? The reason is complicated:
  • In the last two years, homes increased in value twice as much as commercial and industrial properties.
  • The disparity in assessment means homeowners pay more while commerce and industry pay less unless the relative tax rates of those property classes are changed.
  • Ontario regulations permit the city to change rates to shift some -- but not all -- of the tax burden from homeowners to business. Whatever can't be shifted falls on the backs of homeowners.
The rules allow a shift that would leave an average homeowner with a 3.3-per-cent tax hike, but staff want a smaller shift that would hike residential taxes by 3.9 per cent. To do otherwise would make tax rates on commercial and industrial properties higher than the Ontario average, said Jim Logan, the city's manager of revenue and tax collection. "One of the concerns is competitiveness," he said.
Contrary to the suggestion of the Free Press reporter, the reasons for the greater tax increase is simple — it's because council continues to increase spending! Mayor Anne Marie DeCicco, however, is making it quite clear that any suggestion of responsibility on the part of her administration will not be tolerated — also from the Free Press:
London Mayor Anne Marie DeCicco and three controllers backed a staff plan yesterday that would hike this year's taxes for homeowners and raise total charges, including water and sewer charges, nearly five per cent.

Their action and their justification for it -- they blamed Ontario regulations -- drew a rebuke from budget chief Tom Gosnell, who said council should stick to a commitment to keep tax increases below the rate of inflation. The inflation target was tagged at three per cent by council, although in the last two years inflation has been lower.

"At some point, we have to make commitments and stick by them without blaming another level of government. We should be sending a message we're sincere about reducing taxes and this doesn't do that," Gosnell said.

His challenge led to a tense exchange with DeCicco, who defended council

"I don't think it's a fair message to tell our community we didn't do our job … the problem is created by provincial tax policy," DeCicco said.
Right… "the province made us do it" has been the refrain of DeCicco's administration for the past several years. How much poorer do Londoners have to be before she stops washing it?
London homeowners are nearly the highest taxed in Canada, according to a recent study by the city of Edmonton.
Indeed.

Update, April 28:From the London Free Press:
Momentum is building on city council to reopen this year's budget to give London property taxpayers more relief. Despite board of control's recommendation on Wednesday to set the property tax hike at 3.9 per cent, several council members said yesterday they won't break their promise to deliver a tax hike of three per cent or less. For the budget to be reopened, two-thirds of London's 19-member council must vote at Monday's meeting in favour of revising the budget.

Deputy Mayor Tom Gosnell, the lone board dissenter, will have to find the support of 12 council members. Gosnell wants to put another $3 million in provincial funding on tax relief instead of debt reduction. Yesterday, five council members backed Gosnell, six were undecided and five were opposed. Two couldn't be reached for comment.

"I'm getting a lot of phone calls in support," Gosnell said. "When you have the tools and resources (to cut taxes) and you don't, then you leave the public with the impression you have no commitment to get your financial house in order. To me, it's breaking the faith with taxpayers."

A leading ally will be Coun. Paul Van Meerbergen, who has pushed council to cut taxes. "It's far more important to give ratepayers some tax relief, and we can still pay down some of the debt," Van Meerbergen said. "I'm going to do everything I can to make it happen."

[…] Mayor Anne Marie DeCicco and controllers Gord Hume, Russ Monteith and Bud Polhill backed a staff plan to hike taxes.

"For many years we've lobbied the province for more money to offset some of the downloading and now that we have it, it makes no sense to use that money to pay for another new provincial regulation that's created a new burden for us," DeCicco said.

Hume agreed, saying, "It's bad financial planning and all we'd be doing is deferring the expense and, in the long run, it will cost taxpayers more."
I have no idea what DeCicco is saying, but while she is abdicating responsbility in a wilfully inscrutable manner, Hume is at least direct about it. However, with a municipal debt of $335.4 million at the end of 2004 and increasing taxes despite receiving the lobbied-for handouts from the province, city politicians like Hume are hardly in a position to judge bad financial planning versus good. But council can quite easily manage its debt obligations and reduce taxes next year and after by exercising fiscal restraint — council has hardly been compelled to spend above and beyond what is required for basic services. It is simple — stop spending! If council's debt reduction plan is to rely on provincial windfalls or surplus taxation, they cannot claim to know anything at all about financial planning. Curiously, Hume alludes to this in defense of postponing responsibility:
"There's an election next year, governments change and policies change. There's no guarantee for this money each year."

3 comments:

Anonymous said...

Not only that, more is on the way... the Y is committing to fundraising $7.5 to $10 million (see http://council.london.ca/Community%20and%20Protective%20Services%20Agendas/2006-04-24%20Agenda/1item%205.pdf)

They will never, ever, reach that amount with the buffoons running the place and on the board. So they will need to appeal back to the city again...

Committee backs ice pads
Over the objection of staff, a city committee recommended seeking enough land in north London to be able to expand a planned-for community centre to include ice pads and sports fields. Staff wanted to nix extra land they said would be costly and not needed. But three members of the community and protective services committee disagreed. The project would involve a collaboration between the city, the public library board and the London YMCA.

Anonymous said...

the London Y is dirty and the guy who runs it is no good.

TAX UDATE APR 29

Did you see this bit of disingenuous crap from a Controller and a Councillor in today's Freep?

"I think there must be some reasonable way we can come to grips with it," he [Montieth] said.

City hall should also study what's been done in Windsor, Kitchener and Hamilton. It's possible those cities have fewer demands or have neglected them, but it's also possible they have managed their finances better or for a longer period of time, Monteith said.

"We should find out how they're doing it."...


...But if other Ontario cities have coped, London politicians shouldn't use provincial rules as a reason to raise taxes, Gosnell said.

"It's nothing more than an excuse to raise taxes," he said.

While taxes alone would raise the tab for a London homeowner by 3.9 per cent, the boost in water and sewer surcharges would increase the tab by 5.9 per cent, a result that concerns Coun. Rob Alder.

"Here we are at twice the rate of inflation and that's disappointing. Clearly, we need to work harder," he said.


Note to Russ Montieth...How long have you been on council? And it's only occuring to you now to reach out to your mumicipal neighbours and ask how they plan their finances? For FUCKSAKES! And as for working creatively why haven't you been doing that for the ENTIRE TIME you've been on council. What a goddamned charlatan. Same goes for Alder. He's a goddamned second or third termer, why the suddem impulse to "work hard" on controlling tax increases? Rob, you should have said no to some dubious projects and pork barreling of local activist groups in the previous years you've been on council you goddamned nitwit.

MapMaster said...

I did just see that… and that's a great takedown, anonymous.