Is 13.9% tax increase really necessary?

The prospect of an increase of 15% on King Township’s portion of the property tax is eliciting a range of responses from residents:  “….any increase greater than inflation (i.e. 2-3%) is unacceptable;” “…is 15% enough?”   As a variation, some argue that 15-20% is probably justifiable but they wonder whether it would be better to do something like 10%/year for several years as opposed to making the correction in one blow.

First to remind people:  a 13.9% increase on King portion of property tax means a blended tax rate of 5.14%.

For a house with MPAC assessment of 516,000 this amount to an approximate annual increase of $274 or $22.83/month.

For an assessed value of $750,000 this amounts to an approximate annual increase of $400 or $33.33/month

I continue to believe that ~15% is very necessary. I can see that spreading it out over a couple years might be a better plan but I am doubtful.  I ask:  why will it be easier next year?

A number of factors drive me to this conclusion.

Development is going to bring in development charges; but it is not going to fund King Township. The 10 year capital plan has expenditures of $99 million.  Top three sources of funds to cover that are debt ($35 million), taxes ($32 million) and development charges ($21 million.)

Debt is part of our future.  And, King already  has debt of $23 million right now.  Our debt payment this year is $840,000 (principal and interest.) This payment represents about 5.9 points of the currently proposed 13.9% tax increase; and, over the next many years I assume there will be comparable payments, if not more.  The previous Council hid this nasty news last year by paying $350,000 of it with reserves.

The capital budget for this year is $21,900,000.  Given the magnitude of this, the impact on the operating budget which then drives tax assessment is small—only $487,500 which represents 3.5 points of the currently proposed 13.9%.

I have written previously about the need to set funds aside to prepare for the refund to the golf courses because of the MPAC reassessment. The anticipated total refund is $500,000 which represents 3.5 point of the currently proposed 13.9%.

I have also written about the need to start building a reserve for the inevitable day when infrastructure needs to be replaced.  There have been two kinds of criticism to this:  “……today’s tax payers should not be burdened with looking after tomorrow’s needs;”  and, the proposed amount is “laughable.”   I simply don’t agree that it is not our responsibility; and I do agree that it should be more but this is all we can do this year.   I support $141,000 being put into a reserve which represents ~1 point of the currently proposed 13.9%.

For the 3/28 Council meeting, Staff has been requested to identify the choices we will have to make if we are not going to put through a 15% increase.  Staff will also identify the consequences of such choices.

For perspective, to not do an increase in the range of 15% but instead 5%, about $1,400,000 will need to be eliminated.

I can anticipate some of the choices we will be given; I have indicated  them below.  As you will see there are few big ticket items.   Not all initiatives/projects proposed will be offered up as choices as many of them are funded by means other than property taxes such as gas tax and grants.

Idea to lower tax increase $ potential My Comments about the idea
Ignore likelihood of golf courses asking for refunds based on new (lower) MPAC assessments $500,000 Poor choice to ignore totally.  Perhaps we could cover for only 50% and negotiate timing for refunds.
Salary  freeze for non unionized staff and Council <$100,000 No issue to freeze for Council.  I suggested investigating at 3/7 Council. Yes, it will “save” money this year, but cannot be avoided infinitely.
No incremental staffing for Trizan $210,000 I suggested at 3/7 Council re-organizing to absorb work without new staffing be investigated.
Continue to not build an asset replacement reserve $140,000 We will continue to burden future residents with huge capital costs.
Heritage Planner (contract basis) $35,000 Without we will continue to be in reactive mode and not making real effort to protect heritage buildings.  Represents small savings opportunity
Do not add two Clerk positions ~$50,000 Some of the work to be done is not discretionary i.e. legislated; can it be done with re-organizing?
No grants to groups e.g. ORTA, Hospice, ASK, Lloydtown Rebellion $25,000 Small savings opportunity but a major blow to a number of groups important to the community

5 Responses to “ “Is 13.9% tax increase really necessary?”

  1. Judith Tenenbaum says:

    Hello,
    I do not think that we should hire more staff at this time, or at any time in the near future. The unfunded liability of present staff and and any future staff is likely enormous. Private companies including our local hospitals are laying off staff to save costs. We are a tiny “town,” in enormous debt over much of which we had no control. Perhaps it is more prudent at this time to reduce staff

    Does Council even have an idea as to what that staggering future amount could be?

    What benefits have already been given/promised to present staff? Residents would be interested in knowing such information, especially since many of us are now on fixed incomes.

    Also, we have many well educated, talented residents in King that may be pleased to take on the “heritage” contract for free, (given a little respect;) thus leading to a further saving for the Town.

    Please continue to inform us.

    Regards,
    Judith Tenenbaum

    • Debbie says:

      Hello Judith, I appreciate your questions very much. I agree with your point of view of no new hires. If there is a skill set we need, we need to go the contract route. The latter is a reality of the workplace today; we need to using it too. Accordingly, as I believe we need to outsource heritage planner we should do on a contract.
      I understand your point about using the talent within the Township for heritage. Given your comment about “respect” I am guessing that you believe that our volunteer Heritage Committees would have been successful if they had received more respect previously. I think there is some wisdom in that; however, I do believe we need the expertise to establish a strategy for us. Further, given the reality that often “saving” Heritage conflicts with development, we need licensed expert statements/opinions to argue against licensed experts employed on the other side.
      I am on a steep learning curve; as I learn and understand I will continue to communicate.
      Finally…I apologize for being so slow to post your comment. I am having some technical challenges with my website. Debbie

  2. Bruce Craig says:

    Hi Debbie,

    Thanks for your thoughtful analysis of various options for reducing the tax increase and for sharing your viewpoint on the proposed budget.

    I support building King Township reserves at $141,000.
    I support re-examining the golf course refunds. Do we know exactly how much these refunds will add to the tax increase?
    I support hiring a heritage planner, as King as many important heritage resources, and over and over again the public has expressed interest in retaining the heritage character of our communities.
    I support re-organization of staff responsibilities where this is logical and can provide efficiency and savings.
    I support maintaining funding for community groups for the reasons you shared.
    I understand our roads take up a big part of the budget. Can we re-examine necessary road work for 2011, and find more cost-effective approaches to maintenance and upgrades?
    Are there effective ways to partner with the private sector in running and maintaining Township facilities?
    Personally I’d like to see the proposed increase come down to 12% max., however, I certainly support facing our current situation square on, and establishing a strong financial plan for the four-year term of council.
    Thanks for this opportunity to share my thoughts.

    Sincerely, Bruce Craig

  3. Greg Locke says:

    Debbie,

    The value a contract Heritage Planner will bring to our Township at this point in time is invaluable. Please advocate for this expense!

    [I say this in contrast, as a stark example, to the over $5 million (million!) contribution forced on the Township to the new Schomberg Arena where the benefits will primarily flow to hockey and curling enthusiasts, yet the debt will accrue to all Township taxpayers, many of whom will never make the drive here.]

    Councillor Mortelliti summed up the rationale quite elegantly for the need for this type of specialized planner: to take responsibility for the powers bestowed on Municipalities to proactively identify and protect (albeit with limited ability) properties of heritage interest; and most importantly, to properly catalogue and evaluate (stress EVALUATE) properties on the Heritage Registry so that developers and land owners can have due notice, as opposed to the reactive mode they and we are current faced with.

    Even with an “evaluated” heritage watch list, it’s not as though King’s heritage inventory is much safer: we only gain 60 days to delay a demolition permit. But the difference is, with an evaluated list we are prepared to defend worthy properties at the outset AND potential purchasers will know in advance of this interest.

    There are rare developers and land speculators that see the value in heritage preservation and enhancement as means to raise the “water level” for quality of life in communities such as Paul Oberman (most noteworthy for his recent tragic death who restored the Toronto Flatiron building and Summerhill train station). Obermans are unfortunately very rare: largely these agents see heritage as an irritant to their value of land as a commodity, pure and simple. And I believe their influence is being made in the comments and behaviour of more than one Councillor:

    – Councillor Grandilli himself owns more than a dozen properties in the Nobleton area and he has expressed nothing but distain, either directly or via his representatives before Council, for heritage protection.

    – Councillor Cober stated in the last Council meeting that a heritage planner is a “frill”. His claims of frugality are shallow and self-serving, particularly in light of his zealous support of the new arena behemoth.

    If we believe King is a special place that is worthy of protecting and growing our heritage, nature and artistic assets, then if we aren’t willing to invest $35,000 in this process, we should leave this place to be exploited just as many of our surrounding communities have.

    In closing: Please don’t give in to the shallow rhetoric of our unfortunate Council minority: invest these relative pennies in our Heritage.

    Sincerely,

    Greg Locke

    • Jeff Laidlaw says:

      Hi Greg and Debbie:

      A Heritage Planner would be a definite plus for King Township.

      With over 500 properties identified as having heritage attributes; and shockingly, less than 15 of those designated under the Heritage Act, King’s cultural and heritage assets will come under significant pressures as development moves forward.

      It is those heritage buildings which give our communties their unique ambience; provide a tie back to our origins, and demonstrate a respect for the values King has held dear for near to 2 centuries.

      The alternatives can be found in any one of a dozen unrecognizable and interchangeable communities to the south where heritage assets have been torn down at whim to be replaced by the Wal-Marts, Home Depots and cookie-cutter subdivisions.

      After this Council took office, one of the members of the Planning Staff moved on from King Township leaving a vacancy in the staff complement; and to me it would be a wonderful step forward to replace this leaving member with a Heritage Planner. The salary difference of about $ 4,000 is really not meaningful in terms of the broader budget.

      Jeff Laidlaw

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