Area rating: Nobody gets a break
City council has put the area rating debate to bed.
But if you’re an urban taxpayer, don’t expect your taxes to drop.
The city voted Thursday to institute a new system for area rating that adds a “special capital levy” to only the old city of Hamilton. That extra tax – which will bring in an additional $3.4 million to city coffers each year – will be spent on infrastructure updates in the old city alone.
That also means that every area of the city will face a tax increase in 2011.
Council’s decision on area rating – which was years in the making – was lauded as a compromise that satisfies both urban and suburban councillors.
Councillors spent the majority of Thursday morning’s budget meeting congratulating staff and their colleagues for finally tackling the issue.
“The fact that we can support this motion here today dispels dysfunctionality around this table,” said Councillor Terry Whitehead. “We put the most divisive debate since amalgamation to bed. That’s a credit to everyone around this table.”
“I’m so proud of this group to have this kind of discussion at the end of this long and difficult road,” said Mayor Bob Bratina.
The final vote was unanimous and was met with a standing ovation from senior staff.
Area rating, the city’s tax system, has long been a contentious issue for councillors. Since amalgamation, people in the suburbs have paid less than their urban counterparts because they have traditionally received fewer fire, recreation, and transit services.
However, in the years since amalgamation, those services have expanded to rural areas without an adjustment of their tax rates. That means some rural areas are benefitting from services that they’re not paying for.
The area rating update was intended to redistribute the tax rates across the city to ensure that all areas of the city are paying for the services they receive. It was also intended to be revenue neutral – meaning it would just redistribute the taxation levels in the city instead of bringing in more money to city coffers.
However, under this new plan, the city will collect an additional $3.4 million every year from urban taxpayers.
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