The 2011 budget discussions were tough; and as evident from the 1/16 meeting, the ones for the 2012 King Township municipal tax rate are going to be no different.
Last year’s was particularly challenging as all the jargon was overwhelming: reserves, reserve funds, different sources of funding (gas tax, tax supported, DC, vehicle reserve, debentures etc.) was all very confusing. This year is much better: I have more experience; plus our Director of Finance has done a super job in the presentation. You can read the report here.
The proposed tax increase for King residents is a 3.62% (blended rate) on the total tax bill. For an average home assessed at $607,709 the increase is $223/yr or $19/month. Specifically the homeowner’s tax bill (for the average home) in 2011 was $6,158; in 2012, if the proposed budget is approved it will be $6,381.
The tax rate for King residents is a blended rate: it incorporates taxes determined by King Township, by York Region and by the Province for Education. The proposed blended rate of 3.62% is based on a York Region tax increase of 1.8%, zero increase on education and a King tax increase of 8.9%. The tax collected ($6,381 for the average home) is split amongst YR, King and Education per the table below. (Note: at time of writing neither the YR nor Education component is firm; and neither is King’s!)
[table id=9]
1st two are very positive! An operating budget has been tabled which shows a 1% reduction in costs if we continue to operate the same way. This has been done by identifying efficiencies and being very aggressive in assessing costs.
2nd driver, the impact of growth in terms of new tax payers is now being seen. (This is called “assessment growth.”) Combined, we have the advantage of 3.8% reduction/savings which partially offsets the impact of decisions with a cost.
3rd driver: Transfer of $1,131,141 from the operating budget (i.e. the budget funded by tax revenue) to the capital budget. The capital budget gets its $$ from a variety of sources such as gas tax, development charges (DC), debentures, reserves; if these sources are not adequate to meet the need funds can be transferred out of the operating budget.
Have you ever wondered why our current roads and sidewalks are in their poor state of repair? Its because there has been an inadequate capital budget as we have not been allocating very much money from property taxes to the capital budget. (Note: a significant portion of the funds in the capital budget are specifically allocated to projects related to the new subdivisions as those funds come from the DC and debentures.) For the last 4 years we have allocate as little as $210,000; prior to then we had a trend of allocating in in the range of $1,100,000 i.e. the amount proposed for this year.
The capital budget has been starved of property tax $$ during the last several years. This needs to change and we need to start changing it now. The 10 year capital forecast shows spending of $91.8 million; nearly half ($42 million) needs to come from taxation. We must stop the habit of starving the capital budget to avoid a property tax increase.
By making the commitment to transfer $1.1 million to our capital budget the opportunity is also created for better project management i.e. more efficient/lower costs.
4th key driver: recommended program changes
4-a There is work we need to get done; our current Staffing complement cannot deliver adequately either because of lack of time or lack of technical skills. Specifically, the budget proposes adding i) a policy planner to update our zoning bylaw, to complete the intensification study, to update the 3 Village Community Plans etc; ii) a Fire Prevention/Public Educator to get us back on track to delivering the amount of public education required; iii) Human Resources Co-ordinator to both address the current backlog of work and to facilitate succession planning; iv) a GIS technician to significantly enhance the management of our infrastructure including improving our ability to maintain it. Given that our infrastructure’s value is $220 million and it will need to be replaced one day this last one sounds very valuable. You can read much more complete descriptions here at tab 15 of the 2012 Budget Book.
The above roles combined represent 1.6 % tax increase. I fully appreciate that some/many will declare that this is not acceptable given the economic times we are in. We need the work to be done. Yes, a couple could be delayed but next year there will be other new needs. It is true that we are at the early stages of our growth but there is the work of making sure we grow in the best manner possible.
4-b The budget includes funds (representing 1.33 % tax increase) to implement projects, yet to be specifically selected, as an outcome of the Integrated Community Sustainability Plan (ICSP). The ICSP is an initiative to enhance the long term well being of our residents and to protect the environment over the next 2-3 years. Dozens of residents have been involved in developing the plan throughout 2011 and thousands have contributed with input. Specific projects are not identified in the budget as the plan has not been finalized and presented to the public. A public forum is scheduled for early March to present to the public. Shortly thereafter specific priority projects will be selected. It is time to start bringing to life the opportunities identified.
4-c The 3rd significant program change is increasing the level of dust suppressants applied to our gravel road network. Current levels are inadequate: high levels of dust are not just an annoyance for those who live on the gravel roads; it also deters people with allergies/sensitivities from being outside. Last year this request was refused. It is on the table again. We should do this.
There are other smaller program changes and I encourage you to look at the them in tab 15 which you can access here.
5th key driver: transfer 1% tax increase to infrastructure reserves. I think most will agree that someday we should start doing this because we do have $220 million of assets which will need to be replaced one day. In fact, from an accounting perspective 36% of them is already consumed! How does replacement get financed: a critical way is to build an infrastructure reserve. End of 2011 the reserve is forecast to be $817,000…..clearly inadequate. So as a very small step forward $154,000 (i.e. 1% tax) is proposed to be added. The addition should be far more. I think it is a safe bet that next year’s budget will be recommending more.
To summarize: I pay taxes too; I too have to make choices. And I know that some are feeling very stretched. I believe the proposed budget is a thoughtful one; choices have been made. A 3.62% blended tax rate increase, +$223/yr on the average home is required.
I look forward to hearing from King residents on this very important issue.
And as a reminder: 1/30 Committee of Whole agenda includes the final debate and subsequent vote on the agenda.
I think that there have been some atrocious financial management decisions made over the past 15 (or so) years, and as a result the operating budget of the township has gotten out of hand.
Having said that there is also the realization that the township’s practices, processes and yes, technology, are not just years … but decades out of date.
The combined negligence by past Councils has put King Township in the unenviable position of being out of date and facing enormous capital costs which have been deferred for decades. As an examples one need look no further than an outstanding $ 90 million road maintenance requirement.
This dilemma comes at a time when NEW capital projects (sewers and waterworks in King City and Nobleton) have drained the borrowing capacity of the township (now.approximately $ 60 million in outstanding debentures) AND continual download of responsibilities (and associated costs) from both York Region and the province have demanded additional staffing and facility requirements.
In simple downhome terminology; the hens have come home to roost.
Looking to the future, development in King City and Nobleton does not come without.costs.
While King Township will collect approximately $ 50 million in development charges, there is a $ 103 million project commitment necessary to collect that $ 50 million. In other words the immediate net negative impact is a $ 53 million charge to the residents of King.
The argument is often made that new assessment will pay for all of it over time. But, based on approximately 3,200 new units and an average market value of $ 600,000 , the township will be able to collect approximately $ 6 million per annum in new property tax revenue. That works out to about a 25% increase as compared to a 50% increase in population. The math simply doesn’t add up.
This is the unfortunate reality, and it isn’t limited to just King Township.
I would be among the first to agree that residents of King get almost nothing for all the property tax they pay BUT I am also a proponent of facing the reality and coming up with a workable plan to deal with it…
And the sooner the better.
The cost will come eventually and generally if not phased in now will be enormous in a few years: and as a side note, let’s hope in the interim there are no substantial disasters as King has less than $ 1 million handy to deal with them if they happen.
As another observation, currently and last year, both York Region and the Board of Education (which collectively make up about 67% of the property tax bill) have maintained either 0 or nominal increases; and thus any tax increase put through by King Township is mitigated and minimized. These past two years have been, in fact, ideal opportunities to deal with King Township’s dilemmas without creating the kind of impact that eventually will come when York Region finally acknowledges that it too is in way over its head.
I guess that while it’s an untenable situation, and understandably so, I would rather face a short term pain for a long term gain: than face the, what I feel, inevitable consequences of not proactively responding to the problem…. Basically the bankruptcy and dissolution of King Township …. OR alternatively, 60% tax hikes in one jump.
I understand Cober and Pellegrini’s stance on Monday, from a political perspective … but unfortunately cannot and do not support that position. Speaking personally, I want King to survive, flourish and continue.
I applaud the other members of Council for making the tough decision rather than the political one: and would agree with Councillor Grandilli who would support a greater property tax hike than what’s currently on the table, to be directed towards re-building the seriously depleted.reserves.
Thanks
Jeff l
Jeff….I appreciate your comment. Not because you are supporting my stated position on the budget but because it adds different perspective to the issue. IF one looks at need it is pretty clear what should be done. And your point of taking advantage, so to speak, of the low YR budget decision is good. thanks.
While one would agree that a low reserve is flirting with danger and ignoring infrastructure improvements leads to horrific costs in the end, I have difficulty subsidizing debt and being asked to fund more overhead within the same tax year. Public servants as talented as they are, expensive to maintain. Do I want to finance more paper pushers or would I prefer to invest in more boots on the ground like lifeguards, rink guards, parks staff or school crossing guards? etc.
I totally disagree with those that propose that we taxpayers (the ones who will be expected to cough up 50 million dollars over the course of the next 10 years) CAN “afford” it. Why so?
Yes there is a global economic crisis happening around us. The Province of Ontario has it’s own troubles too! We are now billions of dollars in debt. Manufacturing has all but disappeared to China. The unemployment rate is 7+% with virtually the only new jobs being created as part-time employment (24 hours or less a week).
So where does a homeowner get the funds to pay his/her property taxes when his wages are capped/frozen,living day to day with unsecured job security and his/her basic living costs like food are escalating? Is it realistic in 2012 or beyond to expect a King Township resident which there are only 21,000 of us to be made responsible for 50 million dollars over the course of the next 10 years?
So, what do you do when the public purse runs dry? Just keep taxing and hope everyone can pay. Admit your residents will not be able to pay forever and thus explore the benefits of amalgamation with another municipality and thus spread the tax burden around. Declare bankruptcy and let the Province take over. Approach OLG and ask for a casino. Sell every municipal structure and/or land holding that is not being used. Boost user fees. Designate all oublic spaces as parking areas and charge for parking. And heaven forbid, UP development fees.
Either way as a taxpayer it is ME WHO KNOWS HOW MUCH MONEY I HAVE FOR PROPERTY TAXES AND IT IS ME WHO DECIDES WHERE IT IS I WANT IT TO GO! Having lived in King City for 11 years and not objecting to the inconvenience of not having a Smart Center within 10 minutes drive or a Timmy’s on every corner the tax rate in King Township is approaching MY threshold. On the perimeter of York Region there are many villages and hamlets which have characteristics similar to King but are far less cheaper to live in. South of King City are several planned communities with every amenity imaginable. It is a matter of what is the best value I can get from my limited dollars and my friends and associates, is it here?
Monday January 30th, 6:00 pm at the Township offices the 2012 budget comes up for approval. Get involved and say your piece! IT IS YOUR HARD EARNED MONEY THEY ARE GOING TO SPEND!
Sheila….My learning from your comment is that indeed I cannot assess your ability or your willingness, or the ability and willingness of any other tax payer, to pay any amount in taxes. All I can do is to try and assess how much tax revenue is needed. And I am doing that in the context of the current Official Plans/Community Plans.
I also think my job is to communicate clearly the magnitude of the tax increase.
A 3.62% blended tax rate increase, means an increase of $223/yr on the average home. (3.62 % blended rate is derived from King tax increase of 8.9% and a York Region increase of 1.8%.)
If King’s rate increase is increased only 6% , the blended rate would be 2.7% and the increase on the average home would be $167.
Hence one of the questions as you and I and others think about this is whether a $56/year decrease (223-167) is the better choice.
I really do appreciate your engagement in this very important issue.
Hi Debbie,
Thanks for opening up this discussion. I also think this is an opportune time to address several of the deficiencies in staff and reserves, as York Region and Education are adding little to the rate at this time, and the proposed blended tax rate, while higher than inflation, is still within a reasonable range.
A policy planner is critical if we want to avoid continued piecemeal planning in King. In the end, the work of a policy planner will likely save the Township money by making the planning process clearer and more predictable for everyone.
In my view, it is better to address the needs now rather than later.
Bruce Craig
Hi Bruce…I agree that the small/nil increases from YR and Education make this a good time for us to address some serious gaps. And for sure, a Policy Planner is long over due; how else are we going to get the zoning bylaw updated, assess opportunities to strengthen the KC Community Plan in face of severance requests, finish the itensification strategy, update the OP’s for Greenbelt and on and on and on.