Tax Rate Proposal

A 13.9% increase on King portion of property taxes is recommended in the 2nd draft budget and business plan for King.   Below are the 3 tax scenarios I presented in an earlier posting.  To the right I have added the increase proposed in the 2nd draft budget.

King portion of property tax #1 #2 #3 Proposed in 2nd draft budget
%  increase

7.45

9.26

15

13.9

$ increase on annual tax* 121 150 240 227
$ increase on annual tax** 180 225 360 335

*estimate; based on average King residential property with MPAC assessment of $516,000

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

What does a 13.9% increase on King portion of property tax mean to the total rate?

  • Based on the York Region increase being 1.9% and the Education increase being flat, the new blended rate increase is estimated at 5.14%.
  • For a residential property with an assessed value of $516,000 this amounts 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.

Executive summary of budget is here.

Details of budget and business plan is here.

Program changes (i.e. new projects) are detailed here (both the rationale for implementing and the magnitude of expenditure) and program changes considered but not included in the budget.

2011 Capital Budget details are here.   10 year capital plan is here.

Monday March 7 at 6PM there is a Special Committee of the Whole.  The Public is encouraged to attend and ask questions. Approval of the budget is scheduled for March 28th Council.

Several “big ticket” expenditures have jumped out at me:

Like last year there is $840,000 for debt payment (principal and interest).  Last year only $500,000 was funded by taxes; remainder ($340,000) was taken out of reserves.  This year, there are no funds available from the reserves; it all needs to be funded from the operating budget i.e. from taxes.

A contingency of $500,000 has been built into the operating budget to cover appeals from Golf Courses given the precedent setting MPAC re-assessments.  To understand this issue see page 28 and 29 of the budget report.

Wisely, in my opinion, 1% of township tax rate is being put into infrastructure reserves.  We must be doing this every year.

 

11 Responses to “ “Tax Rate Proposal”

  1. Judy says:

    Debbie:
    Including your constituents of Ward 5 in the discussions of key issues is worthy of praise and appreciation.
    There are issues of financing the debt which are high on the list.
    A tax raise of 13% is beyond reason; with appreciation of our debt, I am suggesting that Mayor Pellegrini and Council negotiate a better split of the tax dollars which King gets back. It is time to stand up for the taxpayers of King. Also, we must be able to vote for the York Region Chairman.
    To again note that the Bank of Canada inflation rate is 2.3% which puts into perspective our tax rate.

    The other side of taxation, cutting expenses, will be a difficult challenge.
    It is noted that the federal government is getting out of the business of funding sports arenas, and likewise deeply indebted King Twp should follow suit. Privatizing the unaffordabe Schomberg centre is a reasonable step in the right direction; Scomberg gets their centre and private business gets to own and run it. Everyone does what they do best. Governments have many basic functions, and owning and running sports arenas should not be one of them.

    Regarding a Heritage Planner: A nice idea but unaffordable at this time. What about our present planning dept. expanding its mandate for the present time, hiring a consultant only when necessary and then on a very tight contract.

    We are truly overtaxed at every level with little left to show for it.

    It is time to turn the corner and I applaud your thoughtful and measured responses.

  2. anonymous says:

    A tax raise of 13.9% is absolutely outrageous.
    No matter what the circumstances this must not go ahead.
    The citizens of King have already been drained with the recent MPAC assessments.
    NO taxes could ever be approved at a 14% increase. In particular in King where we have received no additional benefits and infrastructure has disintegrated.
    Bank of Canada inflation rate stands at 2.3%.

    There have been unending tax raises in past years in addition to salary raises of Council and Mayor approved, without informing us of the dire financial position of King.
    We must have an account who is fiscally responsible and accountable to the tax payers.

    Forward Actions

    It is essential that King eliminate all services which are not essential. Non essential positions must be very carefully considered (excluding such services as fire, roads emergency services and the library).

    It is also essential that King get out of the real-estate/ non-essential services industries. This would include selling the new grossly unaffordable arena in Schomberg..It must be privatized as we could not and cannot afford this added frill when we are broke. Private industry manages more efficiently than government as we have been shown repeatedly.

    We are like a family below the poverty line purchasing a mansion and wearing designer clothing and footwear..while everyone is indebted to pay for this unsustainable lifestyle.

    If all else fails, explore the option of floating a say 5 year debenture where the people of King can at least get some interest on their investment with a municipal bond offering.

    The town must live within its means and as with the individual, the alternative is bankruptcy

    Bankrupting the individuals who have built this formerly lovely area is not an option.

    We request that you take a stand of major “belt tightening” and reject this untenable precedent of ongoing fiscal damage to the working and retired families who make up King.

    • Debbie says:

      Yes, it sounds big. But….to remind you, 13.9% on King portion of property tax will hit your tax bill as 5.14% (the blended rate including YR and education). A home with $514,000 assessment would see a $227 tax increase.

      I am very concerned about how those on fixed incomes will manage this. But I am even more concerned if we don’t take the bitter medicine. This evening at Council I will be challenging some of the proposed changes; but, even if some of those challenges are acted on there should still be a significant increase for reasons I have already reviewed.

      Thank you for getting engaged in this. Debbie

  3. Gary Vogan says:

    Unfortunately a significant tax hike is a necessary evil at this time to try and replenish some of the reserves and start the “pay as we go” policy.

    Given the Region and Education tax increase appears to be low this year, the Township of King should look at a larger amount than the 13% proposed.

    • Debbie says:

      Hi Gary…I appreciate you getting involved in this. Since my last posting I have discovered some specific proposals in the budget which I do not agree with and will raise at Council this evening; but impact on budget overall is not great. It looks like you and I are on the same page. Debbie

  4. Jeff Laidlaw says:

    Hi Debbie:

    A couple of quick things….

    You mention the addition of a heritage planner to the budget for 2011. I think it’s important to note that a staff member from the planning department left and this proposed heritage planner would be a replacement…. and the net impact from an operating budget standpoint is an increase over 2010 budget of about $ 4,000 (salary difference). In terms of the overall budget it is not a significant factor and provides the township’s planning department with some necessary guidance.

    I note as well in the materials you link in your article that the proposed committment is only $ 141,000 to reserves with regard to the net capital assets of the Township; which have already depreciated by some $ 74 million (about 38% of their book value) and which continue to depreciate at the rate of approximately $ 4 million annually. As a long term strategy it is difficult to imagine how the ratepayers of King Township will ever have enough capital to replace these assts when we continue to underfund at this rate.

    Finally reviewing the 10 year Capital plan I note that of the just shy of $ 100 million worth of projects —- approximately $ 30 million of that is to come from taxation and another $ 35 or so million from the issuance of debentures.

    Clearly, at the suggested 13% increase for 2011, we are well short of where we should be …. in terms of the long term financial viability of this township.

    Now would be the time to implement any significant tax increases; to allow the municipality to collect reserves against the known and acknowledged future commitments. If one doesn’t the question very simply becomes…. where will all this money come from ?

    I don’t like tax hikes any more than anyone else; but if the alternative is the slow and painful death of this township the choice is easier.

    Thanks

    Jeff L.

    • Debbie says:

      Jeff…I appreciate your clarification, so to speak, about the Heritage Planner. It’s importance is not in terms of the budget impact; rather it speaks to a decision to get required expertise. For sure I can’t disagree with your concern that a 1% ($141,000) addition to a reserve for capital replacement is a small gesture. It is a start; its like losing that 1st 5 lbs when you are obese and need to really lost 150 lb. In the future we need to maintain the habit and hopefully increase it. (Happily, the assets are still on the “young” side so we do have some time. Debbie

    • Debbie says:

      Hey Jeff….I want to correct or at least elaborate on my earlier response to you about the Heritage Planner. The tax impact is very very small (<$10,000) hence my comment that it is not important in terms of budget impact; however, it is not correct that there is a vacancy in Planning. Having said that, I am not convinced that the right solution is to hire someone on a part time basis. We need to be looking at contract. Not sure but to be investigated. Debbie

  5. Fiona Cowles says:

    Debbie, 2011 looks like the year we have to ‘bite the bullet’ and go for a big tax increase. You can’t go on building the debt and draining the reserves.

    Is it arguable at all that leaving the Treasurer position vacant for so long ( a year I believe) in fact led to the chaotic financial situation which now seems to face the Township? The decisions to move rapidly ahead with sewers and associated development, plus the rec. centre, were somewhat less than prudent. Presumably the forthcoming development charges and new taxation revenues were seen as balancing it all out down the road.

    But what do I know!

    Fiona

  6. Nancy and Richard Elliott says:

    Hello Debbie,

    Thank you very much very much for your excellent and totally complete updates. Your transparency is much welcomed.

    Could I make one comment on the proposed 13.9% tax increase?

    1) I do not understand why the proposed tax increase percentage could and should be greater than the inflation rate – say 2.5% – especially when per capita services* provided by King, are virtually identical to the previous taxation year.
    *sewers, water and recreation are funded by the end users

    Thank you,

    Nancy and Richard Elliott

    • Debbie says:

      Nancy and Richard: I am glad you are finding my postings to be valuable. And I really appreciate your question.
      I understand totally where you are coming from. At this point I cannot answer fully; and indeed that is why there is now a 3 week period for the public and Council to ask questions and through that process to influence what is in the budget.
      There are “new” costs which need to be covered but for which you cannot see or touch the product/service; and indeed you may not even personally benefit from them. Some examples:
      • Easiest one to identify is the need to include a $500,000 contingency to cover refunding tax dollars to the golf courses because of the precedent setting MPAC re-assessment won by a couple courses already. In my original post I provide a link to where you can read about this.
      • As was true last year, we need to pay $840,000 for debt i.e. interest. Last year the previous Council decided to take $340,000 out of reserves to cover part of it via taxes. This year we do not have that option. More importantly, I do not believe that funds in reserve should be used towards paying interest on debt!
      • There is the new Trizan (Schomberg recreational facility). The Township has taken on debt to cover our share of the capital; I don’t understand at this point whether in 2011 we are paying for that. What I do know is that there is incremental funding ($210,000) for additional resources to manage it. I intend to be asking why this is necessary.
      • There is a plan to hire a Heritage Planner; impact on 2011 is estimated to be only $35,000 as he/she will not be on board until part way through the year. I intend to ensure that we are not hiring a new person; rather it should be a contract person who will be hired to get a plan in place and then leave.
      Finally I just want to comment that sewers are not fully funded by the beneficiaries. Township took on debt to build. That debt has a cost i.e. interest which needs to be paid.
      Monday March 7, 6PM there is special Council of Whole with one agenda item: the budget. It would be great if you would come. Good opportunity for public to ask questions.

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