The looming crisis in funding city operations in 2017

By Gerry Barker

July 7, 2016

If you haven’t already, you should be receiving a revised assessment of the value of your home for property tax purposes. The Municipal Property Assessment Corporation (MPAC) that adjusts your assessment every four years establishes commercial and residential assessments.

This is the year of adjustment. The notices are determined as of January 1st, 2016, and reflect how much has changed since January 1, 2012. MPAC assesses 5 million residential and commercial properties in Ontario. To establish the current valuation in terms of assessment, MPAC assembles data on the properties using sales, building permits,, location, living area, age of the property and lot size.

If you are unhappy with the evaluation, you may request /reconsideration. Go to the MPAC website and register aboutmyproperty.ca.

In 2008, former Premier Dalton McGuinty’s government imposed a moratorium of assessment increases for four years. This ended in 2011 and MPAC was instructed to limit increased assessments for four years 2012 to 2015 inclusive.

In case you haven’t noticed, your assessment has been increasing in the past four years. They were not big increases designed to play catch-up from the McGuinty assessment moratorium, invoked during the 2008 global financial crisis.

However, we are now in another four-year cycle of MPAC assessments that will first, impact the city’s 2017 operating budget. The 2016 assessment increase will provide additional funding in planning the budget next November.

But here is where things go off the financial rails.

Last December 9, council, in which there was no public participation, ratified the 2016 budget. A staff recommendation regarding a 10-year, two per cent special tax levy on all properties to pay for infrastructure-rebuilding was tabled in a closed-door session before the public meeting. At the outset of the public meeting, it was immediately moved by council finance chair, June Hofland to push the levy to the 2017 budget. Carried.

Now we have a new Chief Administrative Officer (CAO), Derrick Thomson, who is responsible for approving all staff budget recommendations before sending it to council for approval. His former position as Deputy Chief Administrative Officer (DCAO) of Operations has been assumed by Coleen Clack who used to report to Mr. Thomson as manager of Culture and Tourism.

But the recent sudden death of Rodney Keller, General Manager of Operations, has placed Ms. Clack in an unexpected difficult assignment with the loss of two key top managers in Operations within a few weeks.

The search is on for a new Chief Financial officer (CFO) and the task of integrating the chosen candidate will add to the turmoil that lies ahead when the 2017 budget is being considered. The 2017 budget talks will begin right after Labour Day.

Adding to the task is how to restore reserve funds that have been used to balance five previous city budget variances and the Urbacon lawsuit settlement of $8.96 million.

The greatest task for the administration is cleaning up the Community Energy Initiative (CEI) that has cost, so far, an estimated $40 million. Under management of the city-owned corporation, Guelph Municipal Holdings Inc (GMHI), the operation lost $9.4 million in 2015. There is absolutely no opportunity to continue this disastrous plan because of the future high demand for capital to make the system to even function.

GuelpSpeaks originally published the following April 8, 2015

When looking at other cities’ 2015 property tax increases compared to Guelph, we have the dubious distinction of having the highest rate in the 14-city sample. There are several reasons for this as Guelph council continues to ignore the growth of its staff, in numbers and pay and benefits. The future liabilities associated with these increases will affect future councils for years to come as pensions are indexed to the Consumer Price Index.

To meet these staff obligations will result in Guelph taxpayers facing increased property taxes paying the costs of employees, active and future obligations to those retired. Today, 85 percent of all property taxes received by the city are used to pay staff payroll costs.

The research on this report employed a common benchmark of dollars per $100,000 of assessment. This allowed equalized comparisons with two-tier municipalities such as Kitchener, Waterloo and Cambridge, part of the Regional Municipality of Waterloo.

The report was researched from official public sources.

Here is the list in descending order:

City                                    2015 tax increase              Ranking             Difference

Guelph Budget                             3.55%                                    39

Guelph revised                             3.96%                                    44

Hamilton                                       2.70%                                    35                      Minus 1.26 %

London                                          2.50%                                    30                      Minus 1.46 %

Brampton                                      2.54%                                   24                       Minus 1.42 %

Brantford                                      1.88%                                    22                      Minus 2.08 %

Port Colborne                              1.10%                                    18                       Minus 2.86 %

Burlington                                    2.06%                                   18                       Minus 1.90 %

Oakville                                        1.70%                                    15                        Minus 2.26 %

Mississauga                                 2.20%                                   12                        Minus 1.76 %

Cambridge                                   2.72%                                   10                        Minus 1.25 %

Toronto                                        3.20%                                  10                         Minus .76 %

Waterloo                                      1.53%                                     7                         Minus 2.43 %

Kitchener                                      1.9%                                     7                          Minus 2.06 %

Windsor                                        0%                                        0                         Minus 3.96 %

Consumer Price Index 2014   2.1%

Comparing the Guelph revised rate of 3.96 per cent to the next highest on the list, Hamilton, at 2.70 per cent, the difference is an astounding 31.8 per cent!

Back to today

This is why more research has revealed that Kitchener’s and Cambridge’s operational and capital costs are 50 per cent lower than the City of Guelph.

This reflects the undue influence of a rump majority of council who slavishly follow the policies of the previous administration led by former mayor Karen Farbridge.

These policies and special self-serving rules of governance, have led to unacceptable high property taxes and user fees, special deals with developers granting tax relief and delayed payment of development fees.

The bleeding of the public purse will continue until there is real reform of spending.

It’s reflected in one factor: In five years, the administration has failed to meet the budget creating multi-million dollar negative variances.

Think about that. Can you run your life and personal finances by failing to meet your budgets? The difference is the city administration dips into its reserves to balance its books annually as required by provincial law,

Now the reserves have been steadily drained with little replenishment.

I don’t know about you, but I didn’t vote for this.

 

 

 

 

 

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9 Comments

Filed under Between the Lines

9 responses to “The looming crisis in funding city operations in 2017

  1. Joe Black

    My cars and house is not a credit card for the three levels of government.

  2. Kris

    Earlier this week – the media reported that the Mayor was requesting cheaper city buss fares for high school students and a new library in downtown. Not sure how he can deliver on those with his promise to limit property taxes to inflation. I’m also hoping now that the Mayor has decided to stick with an internal hire for the top administrator that the Thomson guy won’t bring back that 2% special levy his predecessor wanted.

  3. LenH

    I keep hearing we have way more fire and police than other cities of our size. Is there any factual basis to this? I see Toronto is planning to downsize. Never quite sure why we need two police vehicles, a fully equipped fire vehicle and EMS to every 911 call.

  4. wendy

    More of these costly “staff proposals” keep coming. Imposing user fees on garbage and yard waste, for “expanded service” which does not seem required. A big call centre at city hall with another hefty price tag, which does not seem to be addressing an actual problem. The mayor supporting uber being allowed without any sort of talk about licensing or regulation as has happened in other places. And he’s also now trumpeting a new library, which at this time, the city clearly cannot afford. Somehow wrapping everything up in the idea of “free markets”. Now, increased assessments on the way, and increased tax bills, and special levies for infrastructure, and special levies for hospital, and increased contracts for city workers, firefighters, police, everyone wants their entitlement. The free market does not give entitlements. Government is not a free market–as the CEI and district energy sham and GMHI governance and lack of accountability has demonstrated. If they were in a free market, they would have had a real business plan, not rose-coloured speculation. Government gets to keep getting paid no matter how much they mess up and waste. I have yet to hear about a staff report designed to save money, except wrapped up in the kind of double speak language (like, if we hire more people for x program, we will save money) used to justify every action and every proposal as if life will end if it does not happen.

  5. wendy

    There’s so many ways to paint what the problem is. Inequity is one. Entitlement is another, with its handmaiden, greed. Following ideology at the expense of reality is another. The research you do, Gerry, is very helpful in creating a clearer picture for the public, most of whom do not have the time or willingness to be a target in front of council, to fight these things as is now expected. Otherwise, they can just keep doing what they want, and often they bank on that outcome. Municipal voter apathy is another factor. The recent big deal made out of some waste sorters not making a living wage is fine, but what about all the other ones who make far above the living wage plus benefits. But the idea that someone making 100,000 plus would ever take a pay cut to allow a lower paid worker to make 15 bucks an hour and not have the taxpayers picking up the slack is out of the question. I am not sure why not. People try to beat down what I get for my work all the time and nobody leaps to my defense, they say, oh well, that’s just doing business.

  6. Deanna

    Thanks for your diligence Gerry in following all the smoke and mirror goings on by both staff and council in Guelph.
    Why are the numbers not front and centre in the paper? It would be so good for the public to see the comparisons. Do we need to put it all on placards and march the city so people know what’s going on?

    People don’t know about this stuff!

    Typical to the way this city has opperated for years. Let’s spend spend spend what we don’t have and no one seems to care.

    Thanks again for what you do to share information.

  7. Capricorn

    Yes, I echo what Deanna says Gerry. Thank-you for exposing some of the truths that don’t otherwise come out. Wish it was possible to get it out there to more people. Many don’t have an interest in local politics, but would if they knew some of the details you’ve posted.

  8. Louis

    Sad thing is come 2017 the city will probably run out of cash, socialism as the problem is you will probably run out of other peoples money , which is exactly what the gang of seven is doing.

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