2011 Budget and Tax Rate

Like most people I get anxious when there is talk about a new tax rate.  But now, as an elected representative who will be making a decision about tax rates I am very anxious.  To clarify:  I am not worrying about peoples’ reaction as I know any tax increase is not welcomed.  What I am concerned about is making the right decision.

1st draft budget for 2011 has been labeled as being “pay as you go”  i.e. capital outlays are financed from  current revenues (taxes) and/or reserves rather than by debt.  At first blush this sounds nice & safe.

But, is this good strategic thinking for the Township?  First, are our reserves (i.e. the funds set aside at the discretion of Councils for future need) adequate?  Second, what do we need to be doing in 2011 to ensure that King evolves to where we want it to be ?

You can read the 1st draft budget here.  As you will see it is at a relatively “high level.”

A 2nd draft budget incorporating 1st round of Council feedback will be available imminently; it will be available to the Public February 28th.  I encourage people to look at it and to challenge what is in it and what is not in it.   This draft will be a very detailed.

The 2nd draft budget is on the Monday, March 7th special Council of the Whole meeting; public can make comments at this meeting.  I strongly encourage you to attend; if you can’t attend, send me an email or phone me.

When I am confronted with a problem, I like to be aware of alternative solutions.    Below are three possible scenarios based on the 1st draft budget.  (Different alternatives may emerge once I have a chance to read the detailed budget.)

King portion of property tax #1 #2 #3
%  increase 7.45 9.26 15
$ increase on annual tax* 121 150 240
$ increase on annual tax** 180 225 360

*estimate; based on average King residential property with MPAC assessment of $514,000

**estimate; based on King residential property with MPAC assessment of $750,000

#1 was presented in the 1st draft budget. It represents a strategy of no new services/products.  1/3 of the increase is driven by debt payment.

#2  was presented in the 1st draft budget also.  It includes a handful of “new” initiatives; most significantly being more road maintenance, Township Enterprise Software solution, Staffing for the Trisan centre.

#3 includes some other new initiatives.  And, very importantly it would enable balancing out the net reduction in our reserves in 2010 approved by previous Council.

Yes, a 15% increase sounds outrageous.  But, when are we going to start to address some serious issues in our Township?

For example:  # 1 and 2 includes <$1 million in total for road maintenace when we have a HUGE road maintenance backlog. (Note:  the “official” backlog is estimated to be $90 million but I have heard this discounted as being wildly unrealistic and that perhaps thinking about it as being a $12 million backlog is more rationale.)

Neither #1 or 2 begins to correct the draining of our reserves.   By end of 2011, reserves are forecasted to be down to about $4 million versus being about $8 million in 2008. In 2010 net reduction was $1.2 million.

Our Township website is lacking in a lot of functionality and will not be improved based on #1 and #2.

In closing:   staying calm when talking about property tax rates is difficult.  First, there is the confusion about MPAC rates and how changes get phased in.  Second, the “calculation” of the tax actual rate is not self evident.

The property tax rate which shows on our tax bills is actually a blended rate; it’s a consolidation of the Township rate, York Region’s rate and the education rate.  For example:   At time of writing the YR increase is anticipated to be about 1.9% and the Education increase is anticipated to be flat.   If, the King rate were to increase 15%, the total increase of property taxes for King would be about 6%.

One more thing:   my thinking about the need to be taking a longer term view is not new. You can read here what Councillor Mortelliti wrote about this in May 2010.

Leave a Reply

Your email address will not be published. Required fields are marked *