You may not have a student attending the University of Guelph but you are helping pay for one. The city supplies subsidized transit, sewer and water plus emergency services to the university. In return it receives a payment in lieu of taxes that is outdated and underfunded.
An analysis of municipal financing in the Globe and Mail recently, blamed the Mike Harris government for the failure of property taxes to pay for the services that had been downloaded in the 1990’s. The provincial government once covered these services included welfare payments; daycare, court costs, senior services and social housing.
In particular, the cities of Ontario faced a 10-year cash crunch as they absorbed the provincial services downloads. With only property taxes as a basic source of income, Ontario’s cities have endured a 14-year shortfall that has been ameliorated by some adjustments by the McGuinty Liberals.
But a recent report showing the per capita debt burden carried by a group of cities, Guelph’s per person debt is $787 compared to Waterloo’s of $540.
Therein lies the problem. Guelph’s population is 118,000 compared to Waterloo’s 122,000. Both cities have Universities. Here the similarities separate. The University of Guelph is the largest landowner in the city. It has turned some of those lands into profit centres through leasebacks and developments.
In 1983, the Ontario government created a payment system based on the number of students each university or college enrolled. This was to replace property taxes and the figure was $75 per student in lieu of property taxes. That figure has not changed in 28 years.
But Guelph has grown, as has the university that now numbers some 20,000 students. Staff and facilities have grown like topsy. Waterloo has gone through a similar experience but does not have the available land for future profit-making enterprises enjoyed by the University of Guelph.
The university pays some $1.4 million in lieu if property taxes to the city. It’s a drop in the bucket.
With all this opportunity, development and profitable use of the university lands, why is Guelph’s debt burden almost twice that of Waterloo?
The answer lies with the action of councils. The two Farbridge administrations have been responsible for the escalation of debt that has exceeded council’s own mandated limit of 55 per cent of annual city expenditures. Guelph’s problem is spending without regard to future obligations of the community.
And it goes back to the amount of taxes or whatever one might call them that the University of Guelph pays the city. It’s an archaic and unfair system that the new Ontario government must address.
It is apparent that one size does not fit all cities with universities.