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THE OBSERVER | Saturday, December 06, 2008
Municipal tax increases just compounding the problem
The economic downturn
is not to anyone’s
liking, but
something good
might come of it if
governments are
forced to review
their budgets on a
line-by-line basis
looking for savings.
I’ve long argued that many, including
local municipalities, simply use last
year’s budget as the baseline for this
year’s, adding on another inflationary
increase (as a minimum), and ignoring
the compounding impact that practice
has on the taxes we pay.
I’ve never bought into the “it’s only
four or five per cent” argument or its
corollary, the “it’s only X dollars more
per year” claim. That’s a poor stance
in any given year, but really falls apart
when you take five plus four plus three
plus four plus three plus …
In that simplified five-year example, a
person paying $3,000 a year in property
taxes would pay $3,150 in the first year
of increases, which, as politicians argue,
isn’t the end of the world. But after
five years, that tax payout would be
$3,684.71. Extend those increases year
after year – tax jumps are the norm,
after all – and the compounding does
a real number on what the homeowner
shells out, usually with nothing more
to show for it.
Each new bit of spending, and each
year’s increase, always makes sense at
the time, or at least finds enough people
to say so. It’s only over time that
we see the full impact – the death of a
thousand cuts.
The Record has run some telling stories
about spending in the region and
its cities, particularly when it comes to
the growing size of government, and
the resultant budget increases. Politicians
and administrators defend their
actions, but the numbers are damning.
That’s not to say we have to aim for
a tax freeze every year: costs rise, and
councillors need to give heed to the longer
term, investing in infrastructure
and setting aside reserves for future
projects. But approving increases by
default makes no sense either. That’s
especially true in tougher economic
times, when politicians of all levels
must resist the urge to simply pass the
expense along to the public in the form
of higher taxes.
It’s rare, however, to find politicians
onside with that idea. Oh, some will
agree to it – in theory. Few will act on
it.
In that vein, Kitchener councillor
John Gazzola has been something of a
voice in the wilderness.
Although often finding himself in the
minority – sometimes a minority of
one – he’s usually the voice of public
apprehension during debates sparked
by the numerous big-ticket spending
issues around the city’s council table.
This, after all, is the city where council
has bought up large stretches of the
downtown with little redevelopment
on the horizon, despite some off-thewall
proposals over the years.
The result has been a steady increase
in the size of government and its bud-
PHOTO | jOni milTenburg
get and, therefore, taxes. That’s been
especially true in this decade, when
times have been good indeed.
Now, with the economy sinking, you’d
think council would be embracing the
cuts necessary to cope with a new reality.
Apparently not.
“Times are tough, but is seems nobody’s
told our council and staff that
– it’s business as usual in Kitchener,”
says Gazzola. “We don’t seem to be prepared
to make some tough decisions.”
In bad times, some short-term thinking
is required in order to help residents
weather the storm. Current budget
numbers call for a five-per-cent tax
increase, which just won’t do as people
face losing their jobs and money is
harder to come by, he argues.
“I want to get us as close to a zero per
cent tax increase as possible without
cutting services.
“We need to leave a few dollars in people’s
pockets so they can spend a little
in the economy to keep things going.”
Now’s the time for municipalities to
undo the tendency to look at last year’s
budget as the base, and just add onto
that without reviewing how they got to
this stage, he adds.
“Otherwise, it just keeps building and
»AbOuT FACe
JoHN ALbRECHT
John’s Nursery
How long have you been in business?
We purchased the first acre of land in 1964. We
started this from scratch, my wife and I. When
we came, this was just cornfield.
Where did you come from?
We’re from Germany, from Bavaria. Lots of
good beer there.
What’s the busiest time for Christmas
trees?
building – but we can’t do that.”
He also wonders why it is that lower
costs for such things as energy, transportation
and building materials
aren’t reflected in municipal budgets.
Those savings, along with increased
funding from the federal and provincial
governments, should be reflected
in next year’s taxes, he says, though
admittedly he’s not optimistic.
“When we do have reduced costs, we
tend to find other ways to blow it,” he
said of the money.
The problem, he argues, is that it’s
too easy to come up with excuses to
continue spending, because it’s easy to
pass the costs along to the public.
“It’s a one-way street. And it’s not
sustainable.”
Even on his own council, he’s not
optimistic there will be any positive
changes – “I have trouble getting people
to agree with me,” Gazzola says of
his council colleagues.
And sounding more like a journalist
than politician, he’s not holding
out much hope politicians will move
to hold the line on spending and taxes.
“If this was an election year, it would
be no problem: we would find a way.”
From the 12th to the 19th . But people with balsam
and Fraser firs, they can put them up early.
When do you start cutting?
We cut the first ones Nov. 21.
What’s your favourite type of tree?
My favorite is still the balsam fir, because it
has that nice aroma, that smell to it.
With the green movement, do more people
want potted trees?
When times are bad, there’s more demand
for potted trees. When times are good, there’s
more demand for cut. It’s a real trend.