Where do we Stand Now?
The Tax Policy Review Committee, chaired by Gary Scandlan of Watson and Associates recommended that the majority of the rural discount be phased out over a 5-year period. That recommendation was accepted by council in a motion made by councillor, Max Kaiser, and passed 6-1 on August 22, 2016. There was a bit of confusion and the result was incorrectly reported in the August 25 Beaver but corrected in the next edition.
In the end, council voted 6-1 to implement the report of the Tax Policy Review Committee with one amendment which extends the phase-in of the changes recommended by the committee from 4 to 5 years
The result was to increase overall rural taxes about 1.25% per year for five years while reducing urban taxes by the same amount but still leaving urban residents paying about 4% more than rural (for sidewalks, street lights and fire hydrants) after the phase-in is complete.
This policy has been implemented and the first 3 increments of the 5-year phase-in took effect in 2016, 2017 and 2018. The remaining 2 increments will take effect in 2019 and 2020 unless the new council changes the tax policy.
What about policing costs?
Max Kaiser’s motion, contained a rider:
…that we seek dialogue with the OPP and/or the Province to find a clear and final decision as to whether or not the “calls for service” for the OPP can be area-rated within a given municipality; and that we seek that decision within this term of Council.
The CAO presented his report on January 9 and recommended asking the province. Council agreed. On January 11 the clerk sent a letter to the Premier, Attorney General, Minister of Finance and Minister of Municipal Affairs request for direction from the Provincial Government on public policy matters relating to OPP police billings and future policing governance. The letter stated:
“The nature of policing and how we look at communities of interest for policing will change with the amendments proposed to the Police Services Act. The Council of the Town of Greater Napanee is seeking direction from the Province on the following three public policy questions, so that the municipality can act accordingly when developing local budgets and safety planning initiatives.
1. Does the Province believe municipal Councils should have the autonomy and authority to establish local levy areas within a municipal political boundary, to reflect differences in calls for service data?
2. Given the larger areas that detachment resources are shared over and the reduced influence of local municipal Councils to deal with policing issues, does the Province agree that calls for service should be billed equally within the detachment or Police Services Board area as opposed to “municipal political boundaries”?
3. Given that Community Safety Plans will attempt to establish the best way to reduce future needs for calls for service in a municipality and that the majority of agencies represented on municipal planning committees will have very broad organizational areas of influence; does the Province agree community safety plans should be developed for OPP Detachment Areas or Police Services Board Areas instead of ‘municipal political boundaries’?”
We’re still waiting for a definitive answer from the Province.
Is this legal?
Probably not. The CAO acknowledges that most interpretations of s.326 do not allow policing to be area-rated, at least where it is provided by the same police force. (s.326 allows area rating only for “special services”, defined as services that are provided in a different manner or different level in different parts of the municipality.) Gary Scandlan was of the opinion that area rating of police services here was not permitted by s.326 of the Municipal Act. The Town’s lawyer presented an opinion to council in secret session but council voted 5-2 not to release it.
History of Tax Policy
1. On September 22, 2015 council passed a resolution to form a Taxation Policy Review Committee consisting of 3 citizens from each region. On October 8, a formal by-law was passed to establish the committee.
2. On October 22, from 8 applicants, in closed session and by secret ballot, council selected a committee of six citizens to review tax policy and recommend change.
Chairman: Gary Scandlan, Watson & Co. Economists, Mississauga
Rural Members: Ted Davie, Axel Thesberg, Les Howell
Urban Members: Robert Marriott, Hans Bichsel, Hubert Hogle
Council liaison is Charles McDonald
The first meeting of the Taxation Policy Review Committee was on November 25. A process was agreed on to select comparable municipalities for guidance in selecting services to review for comparison purposes.
After an exchange of e-mails, in which members nominated and voted on candidate municipalities, 10 municipalities were picked by the members for review.
One (Trent Hills) has no area rating. Six (Meaford, Loyalist, Cramahe, Brock, Centre Wellington, Huron East, Muskoka Lakes) have very small surcharges for sidewalks, streetlights & transit. One of these (Meaford) also has a surcharge for policing which is being phased out.
The other three picked by the members were a bit more complex. Chatham-Kent is a single tier municipality larger than Napanee and a very complex system with 12 different rates for unspecified services. Huron East is a small, mostly rural lower tier municipality amalgamated from 3 townships with 5 different rates for unspecified services. Port Hope is an outlier which has gone through 3 years of turmoil over area rating. The issue is confused by a pre-amalgamation trust fund for nuclear cleanup that belonged to one of the two component municipalities. In 2014, council established a new differential with a 10 year phase-in. The services which are subject to area rating in Port Hope are: police service, police service board, community policing committee, parking, transit, crossing guards, street lights, sidewalks, Christmas tree/yard waste pickup, parks recreation & culture programs, and parks. However, policing in Port Hope is by municipal force and in Hope Twp by OPP which explains the first 3 of the above.
Three additional municipalities were picked by the chairman. Hamilton is a huge single tier municipality divided into 9 areas with surcharges for fire and other unspecified services and a differential similar to ours. Kawartha Lakes is divided into 3 areas with surcharges for police, fire, transit, parks & streetlights. Lindsay is policed by a municipal force, the rest by OPP. Kingston is a single tier municipality with 3 areas and a surcharge of up to 10.4% for fire.
At the second meeting on Jauary 5, 2016 the committee selected 9 special services to review. These were: Police, Fire, Recreation, Waste Management, Streetlights, Sidewalks, Roads, Winter Control and Crossing Guards
The Municipal Act s.326 defines special services as those provided at a higher level in one area, the key words being level (not cost) and area. Special services must have a real “geographic” character, a term used by the CAO at the June 29 meeting at SPC. And the Municipal Act requires that for each special service an area be defined. Sidewalks, streetlights and crossing guards have an identifiable service area. However that service area is not contiguous with the water-sewer district. (For example, only 40% of the water-sewer district has sidewalks.)
Arguably, fire service can be linked to the water-sewer area since hydrants can be connected directly to the pumper in all areas thereby creating a higher service level in a definable area.
For the other 5 services, defining any area which receives a higher level of service is difficult and has provoked considerable debate with a great deal confusion between cost of service and level of service.
Between January 5 and February 2, the chairman collected data and analysed it and provided a 36 page report for the February 2 meeting. The report was surprising to say the least and showed that the cost of providing these 9 services in the rural area was collectively about $2.2 million more than in the urban area.
At the third meeting on February 2, the committee reviewed the chairman’s report. Hubert Hogle questioned the allocation of the Ontario Municipal Partnership Fund (OMPF) grant towards the rural sector and pointed out that it is based on the number of households in the whole Town and was provided because Napanee qualifies as a “small community”. Support from the Ministry of Finance website and the upcoming budget agenda was provided. The chairman agreed that this should be looked at further and subsequently it was apportioned on a household basis.
The 9 services were reviewed one by one. Members had several questions and concerns and additional information on a number of items. The minutes set this out in detail.
There was an interesting episode at the February 9 council meeting which is reported in the February 11 Beaver. The Beaver story does not contain all that was said at the meeting. As usual the agenda contained committee reports for approval including the January 5 minutes of the Taxation Policy Review Committee. When this item came up, Councillor Schenk (ward 1) made a motion to separate the police issue from the rest. Councillor Kaiser (ward 2) seconded it and this passed without dispute. Councillor Schenk then moved to accept the rest, councillor Kaiser seconded it and it passed.
There was discussion about the absence of policing data. Councillor Lucas (ward 5), councillor Harvey (ward 4) and Deputy-Mayor Isbester all cautioned against interfering with the committee. Even councillor Kaiser seemed to agree even though he had seconded the motion. Councillor Schenk then said he was just trying to ensure that the committee had all the data there was.
At the end, the mayor pointed out the privacy concerns, the cost of stripping out privacy info from the data and his concern that staff not be saddled with this. He then said:
“I really think, Councillor Schenk, you’re jumping at the gun here. You can register that, that’s for sure, with the minutes, of your concern but I think I have to agree with the other comments. We put this committee in place and we have to trust that they’re going to come back with a report at the end of the day. And you might not agree with it and I might not but that is something we have to look at at that time. And this committee – I’m not going to go to the meetings because I have my personal views. I’m going to let the committee come back with a report and then I’m going to look at the report and the reasons why. And so, at that point in time, I’m going to… I don’t know how we’re ever going to go against the committee. We started this committee. I mean if you didn’t want this committee you should never have started it. So, I think we should let them do their work and I think you’re presuming something that we don’t have a lot of control over with the OPP in my personal view. But, your motion stands. Recorded vote.”
The motion to try to secure more data from the OPP was lost with only councillor Schenk voting for his motion.
The 4th meeting of the Taxation Policy Review Committee was held on February 16 with all members present, despite the weather. There is a report on the meeting in Feb 18 Beaver including a very favourable editorial.
The amended agenda was accepted which included an e-mail sent by Bryan Lupson to the mayor with questions concerning the lack of data on the costing of police service. The agenda also contained two e-mails from the CAO (here and here) explaining that no more data is available.Mr. Lupson’s e-mail provoked a 2 hour discusssion, led by Ted Davie, about police services and the lack of data and whether all or part of the cost of policing should be regarded as a common service to be shared by all taxpayers. This was not resolved but it was unanimously agreed to ask the OPP for any more data that can be supplied on the residential vs non-residential based calls for service, types of calls, the location of calls broken down by whatever manner they have available, and number of calls for the last 3 years.
Robert Marriott and Hubert Hogle kept hammering away on the following points:
1. Policing, like fire, waste, transportation & winter maintenance is, by it’s nature, a common service provided for the benefit of all residents of Greater Napanee and businesses and institutions. Everyone has access to these services and enjoys the benefit of having these services available when required. Everyone benefits from the suppression of crime regardless of where police action happens to take place. And we all pay for the schools even those with no school-age children.
2. Even if it’s not considered a common service and even if data were available, location of calls for service is a poor measure of the benefit received in each area. A better measure is the population or number of households as was done with waste, transportation & winter maintenance.
3. If there are more calls for service in the urban area it’s because of the different demographic. The urban area attracts the disadvantaged, the non-productive and those with addiction/mental health issues some of whom originate outside the urban area. We also provide a home for their service-providers (women’s shelter, group homes etc) as well as the schools, courts and other public institutions that the serve the whole town but still attract police attention. We remove this burden of servicing this demographic from the rural community but it is unfair to saddle the law-abiding and tax-paying urban residents with the cost of servicing this sector especially when the public institutions that serve them are exempt from taxation.
5. Even if there is a variation of the cost of OPP service, there is no difference in the level of service. Under s. 326 of the Municipal Act, the only services that can be area-rated are ones where there is a different level of service or the service is delivered in a different manner. OPP provides the same level of service everywhere and thus the threshold issue for moving this to the right column is not met.
6. While enhanced fire service may have a definable and logical boundary based on the hydrated area, there is no clear boundary line for any enhanced police service. If there is any difference in service level, it has nothing to do with chlorinated water. Where could council possibly draw the line between the law-abiding people and the scofflaws?
7. If policing costs are going to be area-rated, so should roads, waste etc. If this were done, any variation in the cost of police costs is dwarfed by the huge disparity in roads costs. The overall cost of the 9 services in the rural area is at least $2.3 million more than in the urban. Even fire service is more costly to provide in the rural area.
The chairman provided answers to questions posed at the prior meeting and these were reviewed with the members. Mr. Davie asked for still more data for the last 10 years on the capital budgets items even though these figures are readily accessible on the Town website.
The chairman provided 3 alternatives for calculation of taxes, (1) the existing 32% rural discount; (2) the calculations if everyone paid the same rate and (3) a calculation with area-rating of 4 of the 9 services we studied and agreed has a geographic component: sidewalks, streetlights, crossing guards and fire service. This 3rd alternative would result in a nominal surcharge (less than 1%) on the urban area.
The committee agreed unanimously that any change in taxation should start in 2016 and be phased in over 3 years. This would cause a maximum increase in the rural area of under 3% in overall taxes in each of 2016, 2017 and 2018.
There was some discussion about the service areas for each of the services to be area rated so far (fire, sidewalks, streetlights, crossing guards). It was agreed that crossing guards was an insignificant item and should be eliminated and each of the others should have their own service area.
The chairman’s proposed timetable for future steps was approved. The chairman will present a draft report to the council at its regular meeting on March 8. A public meeting is to be held at SPC on March 29 where the results of the study is to be explained to the public who can ask questions and provide input. A final meeting of the committee is to take place the next day, March 30, after which the chairman will complete his report and present it to council on April 12. This should allow the council to consider the report and make a decision in time for the taxing bylaw which must be passed in early May.
Bryan Lupson, who wrote the e-mail to the mayor was at the meeting and was allowed to speak at the end. Mr. Lupson has a waterfront home, assessed at $659,000 in 2012, at 20 Oakwood Lane, just north of the ferry. (Incidentally, there are streetlights on Oakwood Lane.) He thanked the committee for its efforts in trying to get any more data that might be available on policing and expressed satisfaction in the manner in which the committee was proceeding. He apologized for sounding as if he was criticizing the chairman.
On March 8, the chairman presented his draft report to council. The council chambers was almost filled, mostly with our members. The three urban members of the Taxation Committee were present as well as Ted Davie, one of the rural members. Mr. Scandlan spoke eloquently for about an hour describing the process used by the committee and the results of the analysis to date. Council was generally receptive although there are still questions about data on policing. The questions from council brought out the additional facts that (1) the OPP considers that policing is provided at the same level in each area; (2) those municipalities that area-rate policing have a municipal force in one area and OPP in the other; (3) in general, area-rating is a remnant of the wave of amalgamations in the 1990s and is now being reduced or eliminated across Ontario as service levels become more uniform; (4) All decisions of the taxation committee were unanimous.
210 members of the public came out to the public meeting at SPC on March 29. Chairman, Gary Scandlan spent an hour explaining his report and the decisions made by the committee to date. Several members of the public asked questions and made comments. A report is in the March 31 Beaver. A summary of the comments, prepared by the clerk, will be posted on the Town website shortly.
The 5th meeting of the Committee was held on March 30. Inspector Finnegan, commander of the Napanee detachment of the OPP attended and stated very clearly that, in his view, police service was provided at the same level in all regions of Greater Napanee. He advised he could generate a data-set of the 23,000 calls for service over the last year, with each record containing the date, type of call and address of the occurrence. However, there are privacy concerns and he is uncertain whether his superiors would approve sharing this information with the chairman. There were questions as to how this could be analysed and the committee decided to see if a sample data-set could be obtained to see how difficult it would be to apportion calls between the two regions. There was considerable debate as to whether the place of the occurrence was of any relevance in determining a service level. And most members considered police service to be a common service provided to all when needed at the same level as stated emphatically by Inspector Finnegan. Councillors Lucas, Kaiser and Schenk along with Deputy Mayor Isbester were present for Inspector Finnegan’s presentation and Deputy Mayor Isbester stayed for the balance of the meeting.
After Inspector Finnegan left, there was considerable discussion about whether policing was a common service and where a line could possibly be drawn between the two regions. The result was that the committee recommended that for 2016 council implement a 33% phase-in of the difference between option 1 (the present method) and option 4 (allocation of services based on committee suggestions).
The chairman presented this to council on April 12 as an interim recommendation and asked for an extension of the committee’s mandate which was approved. The recommendation for the 33% phase-in was not dealt with and there were suggestions that the committee meet at an early date to review the phase-in in view of the fact that police data had not yet been received.
On April 21 the Committee held it’s 6th meeting and reviewed the analysis of the OPP data for January 2016 which broke down calls for service on a ward-by-ward basis with overall totals broken down between residential and commercial. The analysis showed larger call volumes in the urban wards (4 & 5). However, when the commercial calls were subtracted, residential calls were the same in the Rural and Urban regions. (The committee had previously agreed that only residential calls were relevant.) Surprisingly, the highest residential call volume appeared to be in Ward 3, which is 90% rural.
Much of the meeting was taken up with questions from member, Ted Davie, which the chairman dealt with one by one. In the end the committee decided to ask for more OPP data on calls for service broken down: (a) by ward; (b) along the traditional water-sewer boundary; and (c) between residential and commercial calls in both cases. The data we received took 6 hours to produce and this was done by the OPP free as a courtesy. The OPP will bill the Town for additional data analysis, hopefully within the budget of $2,500 allocated by council.
The committee recommended that Council approve a 25% phase-in for the 2016 taxation year and the chairman sent a letter to council to this effect and staff recommended that council adopt the recommendation.
On April 27, council unanimously approved the recommendation of the Taxation Policy Review Committee to do the first 25% of the phase-in for the 2016 taxation year. This change will be reflected in the 2016 final tax bills to be mailed around May 31. The motion was made by deputy-mayor Isbester and seconded by councillor Cole (Ward 3). Councillor Schenk (Ward 1) was not present.
To understand the overall effect of this, remember that we are dealing only with the Town component of taxes which is less than half of the total.
The treasurer calculated earlier that removing all area rating would raise overall taxes 8.9% in the rural area and lower them 8.1% in the urban area.
In rough terms, council’s resolution will change overall 2016 taxes by about 2% up or down. Superimposing that on an anticipated 3% overall tax increase means that 2016 taxes will rise 5% in the rural area and rise 1% in the urban area. We’ll all pay more.
The actual resolution reads: “That Council approve a 25% phase-in of the difference between Option I (the current method) of the March 2, 2016 report of the Taxation Policy Review Committee and Option 4 (area rating for fire response, sidewalks and streetlights) for the 2016 taxation year.” The options are compared at p.73 of the report.
Option 1 is the current method, a 32% rural discount.
Option 4 removes the 32% rural discount and replaces it with a surcharge for sidewalks, streetlights and fire response (about 3.7%) in the urban area. Ultimately, this surcharge may be imposed on 3 separate service areas but because of the time constraints, for 2016 it will be spread evenly across the urban area.
The final meeting of the TPRC was held on May 26, 7 pm at council chambers. Further data on policing costs was presented. The committee has spent a lot of time discussing this issue and the question but ended up split 4-2 on policing. It was agreed that asy change should be phased in over 4 years starting in 2016 and that the economic efficiency of establishing separate service areas for sidewalks and streetlights did not justify setting separate service areas for these service.
Gary Scandlan delivered his final report on June 23 which recommended that there be no area rating of police services.
The 176 page report is available here. Policing is dealt in section 9 and the basis of the chairman’s recommendation is in section 9-10 (p. 91) which states:
…there is no clear identification of a special service being provided to the urban area vs. the rural area. Of great importance as well, is the opinion of the O.P.P. Detachment Commander which stated that the level of service provided is the same for all residents and businesses in Greater Napanee.
As the chairman noted in section 1-5 (pp.10-11) section 326 of the Municipal Act, permits services to be area rated only if they are:
(a) not being provided or undertaken generally throughout the municipality, or
(b) being provided or undertaken at different levels or in a different manner in different parts of the municipality.
The chairman recommended small surcharges for streetlights, sidewalks and reactive fire response. The overall effect is to reduce the rural discount on the Town portion of taxes from 32% to 3.5%. (This can be further broken down to 2% for streetlights, 1½% for reactive fire response and virtually nil for sidewalks.) See Table 6-4 at p. 77.
Because of the minuscule amount for sidewalks and streetlights the cost of allocating surcharges to those areas that have them was found to be uneconomic.
The chairman recommended a 4-year phase-in starting in 2016 and notes that the effect of this would be to raise overall taxes in the rural area by 2.3% annually. (p.93) Overall taxes in the urban area would be reduced by a similar amount and the first phase of this change has already been incorporated in the 2016 tax bills which were mailed in June.
The committee members were unanimous in all of the above recommendations except police services which was split 4-2. The chairman came down on the side of not area rating police services.
The chairman presented his final report to council on June 28. Unfortunately, Councillor, Roger Cole (Ward 3), was not present and Council voted to defer decision until a date in August when all councillors can be present. Mr. Scandlan is to re-attend at that time. The report recommends small surcharges for streetlights, sidewalks and reactive fire response but also recommends that there be no area rating of police services. The report recommends a 4-year phase in starting in 2016. The 176 page report is available here. The effect of implementing the report would be equivalent to lowering the 32% rural discount to about 3.5% over 4 years.
Mr. Scandlan took 35 minutes to present his report in detail. He devoted a lot of time to explaining why police service could not be area rated under s.326 of the Municipal Act. He emphasized that all votes of the committee had been unanimous except the vote on police services which was split 4-2. His presentation was expertly done after which he faced some tough questions especially from councillors, Schenk and Kaiser and the mayor. He did an excellent job of answering all questions and defending his report. But it remains to be seen what the final outcome of this will be.
It seems inconceivable that council would ignore this report when so much time and effort has gone into analysing the data and the committee was unanimous on all recommendations but one especially when it was the rural ratepayers and their councillors who had insisted that an independent study be done. If council chooses to ignore the report and go off on a tangent the entire process will have been a waste of everyone’s time and a total waste of over $100,000 of the taxpayers money.
The committee’s role was to advise council. Tax policy could only be changed by council.
On August 22, council voted to resolve tax policy. There was a bit of confusion and the result was incorrectly reported in the August 25 Beaver but corrected in the next edition.
In the end, council voted 6-1 to implement the report of the Tax Policy Review Committee with one amendment which extends the phase-in of the changes recommended by the committee from 4 to 5 years.
The first 25% of the phase-in took effect in 2016 and the remainder of the phase-in will take place in 2017-2020. Council will continue to press the Province for more data on the breakdown of police services and may revisit this if more data is obtained. But, for now, there will be no surcharge on the urban area for policing. To date, no more data has been obtained and obtaining same is likely to be expensive and it is not clear whether council will agree to spend the additional money to get it.
The exact wording of the resolution was:
That this new taxation policy consider “Method 4” of the Taxation Policy Review Committee Final Report in so far that we take the area-rating of fire services, streetlights and sidewalks as included in the report;
And finally, that we not leave the OPP issue alone, such that we seek dialogue with the OPP and/or the Province to find a clear and final decision as to whether or not the “calls for service” for the OPP can be area-rated within a given municipality; and that we seek that decision within this term of Council;
And that the phase in period be changed to 5 years, with the first year having already been done.
The effect of the decision is to reduce the rural discount from 32% to about 3½% over 5 years There will be minor surcharges on the urban area for sidewalks, street lights and enhanced fire services.
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