Wednesday, January 16, 2008

Decline in assessment growth may expose London's lack of fiscal discipline

As reported in the London Free Press today, property assessment growth of 1.51 per cent in London last year is the lowest rate of increase since 2004. This is bad news for taxpayers because expansion of the tax base is used to mitigate the effects of growth in City spending on property tax rate hikes — although this has been, of course, cold comfort to taxpayers who have seen their assessments rise in concert with tax rates. Without assessment growth, however, taxpayers will see almost the full brunt of annual spending increases well above the rate of inflation passed on directly in the form of rate hikes. There will at least be the mixed blessing that the City will find it harder to continue to pretend that those rate hikes have ever been close to the rate of inflation.

Dependence on assessment growth to insulate the City from the appearance of significant spending growth is a perilous "strategy," for lack of a better word, when property values are subject to a host of external economic factors outside the City's control: demand created by interest rates, dollar values, and regional, provincial and national competitive or anti-competitive policies. As economic outlooks deteriorate south of the border, and eventually in Canada, the prospects for continued property development and assessment growth appear headed for further decline; property valuations may even decrease. At the same time, however, London's administration shows only small — shall we say token? — signs of limiting its tax-funded obligations and liabilities — including, to take just one example, continuing to fund the Guy Lombardo Museum ghost attraction.

Without spending reductions at City Hall, Londoners appear to be headed for tax rate increases in the next few years at least in the 4 to 5 per cent range — about the rate of growth in spending over the past two years — at a time when many of them will be least able to afford it.

Of course, if politicians and administration continue to find themselves reluctant to address the spending that drives tax increases, they might at least be reminded that prohibitive and "arbitrary and ill-advised" restrictions on property use hinder development and assessment growth as much as do prohibitive taxes.

2 comments:

Elaine said...

I can't believe they are dragging that old Guy out again to waste money on. Costing the taxpayer $27,500.00 a year to entertain 400 people who visited it last year, and came to the consensus it was crap. I don't imagine those 400 will be back. It is like storybook gardens, you see it once and there is no urge to see it again.

They would have to charge over $650.00 a ticket for a tour of the place they have now, to break even.

It warms the cockles of my heart they have found volunteers who will glady take over the helm and seek out ways to waste taxpayer money promoting it.

MapMaster said...

$650 a ticket is a steal compared to the costs to taxpayers for debt servicing. At least we'd be getting a boring tour in exchange, instead of a Triple-A Credit Rating plaque to hang on our walls.