Hubert
W. Hogle
NAPANEE,
K7R
1R8
(613)
532-3672
e-mail:
hogles2@yahoo.ca
March 4, 2015
Mayor and
Members of Council
Town of
Greater Napanee
Dear Mayor
and Members of Council:
RE: TAX POLICY
Council is to
discuss tax policy on March 10 and I would ask for no more than 5 minutes of
your time. Most of what I want to say is here.
I understand
that a large contingent of rural ratepayers have been recruited to attend.
Over the last
6 months I have talked to some of the councillors and numerous members of the
public on both sides of the urban-rural issue. What has struck me most is the
degree of public misunderstanding about tax policy.
In
particular, there is one matter that is poorly understood. Most rural ratepayers
seem to think that if area rating were completely removed they would pay 32%
more in taxes.
I know that
this is simply not true. I believe the number to be about one quarter of that.
For one
thing, area rating applies only to the Town portion of taxes which makes up
about 40% of rural tax bills. County and
Education are not area rated. And, for every additional dollar raised in one
region a dollar less is raised in the other. So the effect on each region is about
one half of the differential.
I was
astounded to learn that the precise calculation has never been done and the
data to do it is not published. On March 2, I asked the Treasurer to calculate
the actual number and provide it to council for March 10 or provide me with the
data so I could do it myself.
How did we
get here?
I believe
that amalgamation has led to many efficiencies and improved services all
around. However, unfortunately, 17 years later, old rivalries and grievances
still persist and I believe they are a distraction from the important jobs that
council must perform.
Shortly after
amalgamation, rural residents claimed that their taxes had gone up. On one
occasion, they circled Town Hall during a crucial vote. Perhaps their taxes did
go up - the claim was never verified - but, to preserve a fragile union, a
concession was made. For 15 years, Napanee has had a
tax system which is unique in
No effort was
made to justify the line drawn on the map then or now. Although the line
generally followed the water-sewer area, the additional tax was not designated
for water-sewer service, a fact that has given rise to a lot of confusion over
the years.
And no one
now remembers how the arbitrary number of 34% (now 32%) was arrived at.
Napanee's
situation is unique.
A few
municipalities have area rating for a specified service in a specified area
where the cost of that service has been determined. A typical example is
There is a
reason why the other municipalities do what
Other
municipalities comply with Provincial law. Napanee
doesn't.
Even our
County does not have area rating although most of it's
services are centred in Town.
For as long
I would argue
that much of the rural fury should be directed at MPAC.
To say MPAC
is less than perfect is an understatement. In 2006, the Ombudsman investigated
and found many shortcomings. But, MPAC does at least have an appeal process to
correct errors and I suggest that it is not council's job to try to second
guess either MPAC or the
No one likes
paying taxes. But, the tired argument that rural taxpayers receive less value
for their tax dollars is full of holes. Residents of urban Napanee
already pay all capital and operating expenses of the water-sewer system
separate from taxes. And while urban Napanee has
certain services such as sidewalks and street lighting which are not available
elsewhere, these services are one of many factors that MPAC uses to establish
assessed value and urban taxpayers already pay for these benefits through
increased assessment.
The level of
policing on the north side of
All of us
drive on both urban and rural roads on a regular basis. Rural roads, which have
lower traffic counts, are not maintained to the same standard as urban but
there are far more miles to maintain per capita.
This is a
debate that could go on for ever. And, it will unless our tax policy is brought
into compliance with s. 326 of the Municipal Act.
Another study?
If council is
determined to area rate any service or services, I suggest that the services
must, of necessity, be ones that start and stop at some defined line on a map (eg sidewalks, street lighting, transit, water, sewer). This is in fact what other municipalities do. If
council decides to venture down that road, I believe that council itself should
select the list of services to be reviewed (the
previous list having been rejected for very good reasons). This will require
multiple lines on a map, one for each service.
The
calculations should be done by a qualified consultant. A secret process will
satisfy no one and only ensure that the squabble continues and perhaps
intensifies. I suggest that a publicly available data-set, filtered to remove
any privacy concerns, should be given to a qualified consultant who is asked to
determine (a) the marginal cost of delivering each of those services in the
defined area for each service, and (b) what percentage of those costs are
already recognized by user fees and the assessment process. An opportunity
should be given to the public to challenge the completeness and accuracy of the
data-set and the methodology for its review. When this is obtained a decision
should be made and a by-law passed to bring our tax policy into compliance with
s.326 of The Municipal Act, 2001.
I must add
that I suspect that if council ventures down this road, any differential in the
costing of services in each region will be minor. I think it far preferable to just bite the
bullet and phase out area rating over the next 4 years, saving perhaps $50,000
in consultants fees and huge amounts of staff time to
assemble the data. I believe that the effect on either region of simply phasing
out area rating over 4 years would be less than 2% per year.
It's time to
put this behind us.
The 1998
amalgamation was supposed to have led to savings, consolidation of services,
disposal of surplus properties, and improved service to all. In many ways it
has. But to a great extent, Greater Napanee has
failed to achieve the savings that could have been obtained. The reason is
quite simple. 17 years after amalgamation, council still finds itself working
at cross purposes. Protection of regional interests and personal rivalries have
distracted from the important job of governing for the good of all. In my view this will continue as long as we
have the urban-rural divide.
I will give
two examples of money that has been wasted which can be directly attributed to
the urban-rural divide:
1. After amalgamation, many services were
consolidated and many properties were clearly surplus. However few have been
sold because each councillor feels driven to protect "their"
property. Millions of dollars have been lost which could have been used more
productively elsewhere.
2. Nearly a million dollars has been wasted by
the zealous protection of the $3.68 million left from the sale of the Napanee Hydro assets (earning less than 1%) which could
have been applied 12 years ago on the arena mortgage, recently renewed at
3.15%. 17 years after amalgamation, urban councillors still regard this as
"their" money and refuse to allow it to be used to pay for a building
that happens to sit in old Richmond Township.
I have many
more examples. I expect that the rural ratepayers who will fill the hall on
March 10 will too. Today I cannot get a haircut without hearing a series of
gripes about spiralling taxes. The gripes originate in both regions.
I know the
mayor hears these too. We use the same barber.
The system
designed in 2000 was supposed to smooth over regional grievances in an earlier
era. However, it has now ended up where council is called on to function in a
system which creates two classes of people and pits neighbour against neighbour
and region against region.
For the good
of all, it's time it was ended.
Thank you for
reading this. I would be more than happy to answer any questions at the meeting
or after.
Yours very
truly,
Hubert Hogle