Tuesday, December 4, 2007

Baby steps

When did the old City Council — that for at least the past two years has refunded less than ten per cent of the City's multi-million surplus take in tax revenue to taxpayers — get turned into this City Council?

Council yesterday rejected General Manager of Finance and Corporate Services Vic Cote's recommendation to put a cap of $850,000 of this year's anticipated $7 million surplus — in itself more than ten per cent — for use in reducing next year's tax rate increase and instead voted to make it the minimum amount for that purpose. This sudden munificence comes much to the dismay of Controller Gord Hume, who argues that Cote's plan to "commit half of each years' surplus to reducing debt and the balance to funding depleted reserves and paying for public works and one-time community needs" would lower tax rates in the long run. Hume's rationale for committing surplus revenue to debt repayment, depleted reserves and necessary public works makes a certain amount of back-door sense, as these certainly do constitute future tax obligations for Londoners… except that Hume and the rest of council have in the past made the "one-time community needs" the financial priority for surplus spending, in effect using budget surpluses to increase the city's tax revenues for the purpose of distributing gifts and gratifications to various constituencies to their own political benefit. For example, last year's surplus was used to fund the following:

  • $200,000 for the aquatic complex at the Boys' and Girls' Club,
  • $250,000 on top of an equal amount included in a reserve to buy woodlands,
  • $200,000 to the Children's Museum,
  • $200,000 to the London Ski Club,
  • $650,000 for new affordable housing,
  • $500,000 for "downtown parking initiatives,"
  • $500,000 to establish a "severe weather stabilization fund," and
  • $200,000 to plant trees.
Such items hardly protect the taxpayer from future tax obligations, and in fact contribute to the feelings of entitlement to tax dollars that afflicts the city's community groups. If Hume were concerned for the future tax obligations of Londoners he would at once drop his relentless push for a tax-funded performing arts centre in London, but of course one comes to suspect that his real interest in defending Cote's proposal lies in the protection of the maximum use of surplus revenues for his and council's own political ends.

More to the point, however, tax obligations are not reduced by appropriating additional taxes to apply for necessary budget items — an obviously absurd proposition — but by reducing actual spending of taxes, a reality that no one on council, for or against Cote's proposal, is prepared to recognize except Paul Van Meerbergen. Funding debt repayment, depleted reserves and necessary public works ought to be the first — and last — items on the city's budget preparation, not an afterthought, if council is concerned with the level of taxes in the city.

Council's decision to allocate a minimum of $850,000 to reducing next year's tax increase is a welcome preliminary step to allocating council's duties and privileges viz. taxes and spending, but if revenue is not budgeted in the first place, councillors cannot even pretend that it is an asset of theirs to distribute.

See also:

Once again, Londoners get robbed twice by city council
Over the board: 4.6% tax increase in store
Budget surpluses are bad news for taxpayers
The gift that keeps on grabbing
London briefs
Not all special interests are equal
Cynical surpluses
It's going to get more expensive to live in London… again
City Hall cannot be trusted with taxes
Melba toast
Don't trust council with a "surplus"
Thanks for the two bucks, now scram
And my income tax refund is a bonus too…


Jake said...

This has been the fourth year in a row the city has racked up a multi-million dollar surplus. The city keeps overestimating the tax increases year after year so they gouge taxpayers again and again.

Whoever is estimating the tax rates at city hall has never taken course of actuarial estimates and contingencies. Simple accounting principles are not being used as estimates should be accurate over a set period of time--clearly they are not! They obviously are either grossly incompetent or knowingly overshooting the rates on purpose. I have a good hunch its the latter.

NIAC said...

Downtown Parking Initiatives?

OH...you mean JOBS.

Anonymous said...

Surplus means we were charged too much tax - it doesn't take a rocket scientist to figure that out. So the money should be paid back to the people who were overcharged in the first place - US!

And Jake's right, the over-estimating each year is intentional - that way they can take their "surplus" and spend it on pet projects, like more fake trees.