Wednesday, January 25, 2006

It's going to get more expensive to live in London… again

The London Free Press reports that council has approved a 2006 budget that raises residential property taxes by 2.95 per cent. After two years of 5.9 and 5.3 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. Moreover, the average homeowner in London will still be on the hook for an additional $60 in property taxes, and the apparently reasonable increase owes much more to the shifting of the tax burden to commercial properties than to fiscal restraint. This shift — and the Free Press article makes no mention of whether the province has approved the city's request — is no more than a populist strategy during an election year. Homeowners and free riders make up a substantially larger percentage of the electorate than business owners, and the various effects of higher prices, lower payrolls or reduced investment by implementing higher business taxes are at a sufficient remove in time and ordinary perception to seem harmless enough.

Council was also able to use funds from an anticipated $9.5 million "surplus" — in reality, none other than taxes paid to the city above what it needed to cover its obligations — to camouflage some of this year's spending. Responding as usual to no other initiative than adminstration's advice, council used only $650,000 to reduce this year's tax burden, while council approved some last minute spending additions:

  • $750,000 was added to the North London Optimist Centre construction project that was already slated to cost $2.2 million;
  • Orchestra London gets an extra $77,000 to reflect higher revenue that hadn't been finalized when the budget was drafted. In all, the orchestra and the Grand Theatre will each receive $465,000;
  • Council will spend $100,000 to enable its chambers, offices and committee rooms to be set up for wireless technology, such as laptop computers;
  • Two areas that had been slated for money got more, but not as much as some had sought -- for splash pads and a program to light walkways.
This year's budget is no more than an effective subterfuge for fiscal restraint — by which council means no more than whatever might sound reasonable to taxpayers who have had property tax rate increases of 5.9 and 6.6 per cent in the last two years. In practice, fiscal restraint to this administration means capping new municipal debt at $30 million a year, annual increases in property taxes as well as sewer and water charges, overtaxing Londoners in the previous year to compensate for extravagant budgeting, shifting the tax burden onto a smaller constituency, and relying on provincial and federal funds. The current adminstration clearly has no idea what fiscal restraint actually means — Londoners will not have good governance until it removes this adminstration.