You are here: 2011 tax rate increase.

2011 tax rate increase of 3.5% is reasonable.

Some residents are concerned about the approved tax rate increase of 3.5% for 2011 and an argument has been made that this is well in excess of historical inflation. That perspective overlooks the fact that the tax bill is a composite of several things, some of which are in addition to inflation or are beyond the city’s control. These include infrastructure renewal, external boards and agencies, and provincial requirements. All of them are in addition to our municipal requirements.

Let's look closely at the components of the 2011 budget: first up is infrastructure renewal.

Our infrastructure renewal policy stems from The 1998 Road to Recovery report which was presented to Council on July 16, 1998 by Mayor Gary Bennett and the city’s Senior Advisor, Gardiner Church. It outlined the appalling state of the city's infrastructure and a capital backlog at that time of $200 million which was worsening year after year, As many residents may be unfamiliar with it, some of it might usefully be relayed here. Under the section “Fiscal Imperatives for the New City,” the first topic, “Overcoming the Capital Backlog,” begins:

“A strong, competitive City requires a high quality and modern physical infrastructure. Aging infrastructure must be renewed and replaced with annual investments in the physical systems and facilities that lie behind and beneath most public services. In this community, the pattern of past practices has been one of inadequate investment in the capital base of the community’s infrastructure. In must years, capital budgets have been very limited; in some years nothing. The capital backlog — the investment needed to address physical infrastructure needs which have not been dealt with in the past — grows with every passing year. This benign neglect must end this year.” The report found that “the capital backlog facing the City is in the order of $200 million dollars. To overcome this backlog annual investments of $20 million are required for 10 years. To this must be added at least $26.5 million for capital renewal on an annual basis. Kingston does not have the capital reserves to meet this fiscal challenge.”

At the budget meeting of February 2, 1999, recommendation #1 was:

“That the Municipality develop a Capitalization Policy that would include:

a) progressive increase of contributions from current operation to reserves for Capital

b) initial increase of debt level, using debt capacity, until off-set by pay-as-you-go ...”

Long-term infrastructure renewal paying off; helps credit rating.

So began the practice of annually adding 1% to the tax bills to fund infrastructure renewal. Residents have begun to notice that roads are getting better. Staff estimate that it will still take another ten years of adding 1% each year until we achieve the ability to keep all our infrastructure current on a “pay-as-you-go basis.” Until then, renewal must be funded in part by debt.

Four years ago Kingston’s credit rating was A+. It has now been upgraded to AA- which has a direct bearing on what interest rate we pay on debentures. Our disciplined approach to overall spending and infrastructure renewal is considered to have been a contributing factor.

I would also note that the last council, of which I was a member, had the lowest rate of tax increases since amalgamation. I would invite you to read my discussion of taxes and the economy in the archive section of this website.

The external boards’ and agencies’ budgets, as the press has indicated, account for approximately 30% of our tax bill. The CRCA and the Health Unit have the authority to tell us what we must pay. If Council and the Police Services Board cannot agree on the police budget, it must go to binding arbitration. Approximately 20% of the bill paid by residents includes the education requirement, set by the province. The city is merely the collection agency and has no input.

The tax bill also includes a 1% levy that was phased in over three years, to pay for improvements to KGH. Again, the province is in a position to dictate how much we will spend and when, or the work does not get done. If I remember correctly, this will last for ten years.

In consequence, a straight comparison of the city spending versus the CPI is not valid, but rather of the total taxpayer obligation to a number of different bodies.

Queen's Park leaves us short by $6 million annually.

Given the enormous presence of post secondary institutions and hospitals in Kingston, all of which consume municipal services, we are at a distinct disadvantage with respect to all other Ontario communities because of the payments in lieu of taxes made by the province on their behalf. The per capita rate was set in 1987 at $75 per student and hospital bed, and remains unchanged almost 25 years later. If this was adjusted for inflation, we would receive an additional $3 million. If the payment basis was changed to current market assessments, like your property taxes, the city would have approximately an additional $6 million annually in total. The potential tax rate impact is obvious.

As our MPP John Gerretsen does not believe this is an issue, let me suggest that you tell him it is. (See my motion of December 21, 2010 as posted on this website.)

Quality of life going forward is the bottom line.

The case for the infrastructure renewal surcharge has been well made. We have little control over the external agencies. In our operating budget, union wage agreements are a major consideration negotiated. Privately owned business may be able to fire people indiscriminately, but we cannot. In short, there is very little “discretionary” spending in our budget. And what should our “discretion” be? Throw up our hands in despair because of the inequalities of “heads and beds” and not address needs widely held by most Ontario communities, or try to improve the quality of life of our community.

We have consistently been told that quality of life is a major consideration for businesses locating in Kingston. If we do not continue to address those needs in a balanced manner through the lens of the economic, cultural, social and environmental pillars of sustainability, what will be the negative consequences for ourselves and our successors? If the decision is made to “catch up” (as we are now with infrastructure), who will have to pay how much ?

I would welcome any comments and ideas you have about this issue. Please email me directly.



613.549.1900
www.billglover.org
bglover@cityofkingston.ca


^ Top

Previous page: Sydenham capital projects 2011 – 2014.
Next page: Garbage and recycling.