Tax freeze? Count on an increase

[Jamaican-Phoenix]

Randall Denley puts out another good article... I can't believe I'm starting to agree with what Denley writes...

http://www.canada.com/ottawacitizen/news/city/story.html?id=aabf2ef4-7d62-4e75-9e92-32412b504608

Tax freeze? Count on an increase
Randall Denley, The Ottawa Citizen
Published: Tuesday, November 13, 2007

Ottawa city councillors face a big test when they begin their annual budget odyssey tomorrow, but it's not freezing taxes. If they go that route, they've failed. What we should expect instead is a rational, three-year plan to put the city in relatively sound financial condition. That's going to cost you money.

Thanks to a combination of wishful thinking and grandstanding by councillors, tomorrow's budget plan will sound a lot worse than the document councillors will actually approve in December. Some councillors still believe in tax freezes, the tooth fairy and Mayor Larry O'Brien. Others think the public demands the pretense of a great struggle before they agree to a tax increase. That's why staff have suggested more cuts than will really be required.

What should happen, and probably will happen, is that councillors will agree to a tax increase of just under five per cent. That would consist of about 1.5 per cent for the police, two per cent to speed repairs of roads, sidewalks and buildings, and a further 1.4 per cent to cover inflation in the cost of all other city operations.

If councillors take this route, it will still involve many tough decisions and some service reductions. It will also be a logical outcome to all those months of mind-numbing meetings they attended in an effort to move the city away from short-term financial thinking.

The prime example would be last year's budget. The mayor was boasting last week about what a great effort that discussion-free budget was. It did hold your tax increase to a puny 0.3 per cent, but it burned up more than $30 million in reserves to do it and also included some increased spending that the city couldn't really afford.

The latter was tossed in to get left-leaning councillors to unanimously approve the budget.

The theory at the time was that the budget would buy a year to prepare a real plan for a tax freeze, but O'Brien admitted last week that he has no such plan. City staff do, but councillors and the public won't like the depth of cuts required, nor should they. People have made it abundantly clear that they don't want essential services reduced to save themselves $50 a year.

The question councillors have never answered, and probably never will, is what services are essential? Expect every group that stands to lose money in this budget to argue that what it does is vital. A new lobby group called People for a Better Ottawa has just been formed for that purpose. The library board has positioned itself for a fight by proposing to close branches if its budget is squeezed. It's a tactic designed to leverage maximum support from the public.

One of the toughest issues for councillors will be public transit. City staff have been trying to keep the tax impact of this important service down by making riders pay 50 per cent of the cost. Even with planned fare increases of five per cent in each of the next three years, it's going to take service reductions to reach that kind of split. That will require a new approach from councillors, who typically argue that it's possible to offer more service while increasing fares hardly at all.

Councillors will also not be happy about the restraint this budget imposes on their ability to add new capital projects. Staff will try to limit this kind of spending to $60 million over three years. It sounds like quite a bit, but the proposed new archives building and the requested additional contribution to the new Ottawa Congress Centre would burn through nearly all of it. There is no money available for widening Road 174, something that will be a big problem for east- end councillors. The federal and provincial governments have promised most of the money, but the city's share is about $15 million.

In effect, councillors have to come to grips with the fact that, for the remainder of this term, they have no new money for any building or programs beyond what they've already identified.

The city's finances are pretty predictable from year to year. Other than bad direction by councillors, there is no reason to lurch from budget crisis to budget crisis. What we should be demanding from our councillors is a three-year commitment to rational budgeting. That means no more diverting much-needed capital dollars to the operating budget, an end to using reserves for one-time fixes, sticking with the plan to raise taxes two per cent each year to help cover the city's repair backlog and increasing taxes enough to cover the cost of services people want.

Councillors have already approved all of that in principle. This budget is the test. Can councillors stick to a responsible plan, or will they fall prey to short-term thinking, again?

[p_xavier]

Originally Posted by Jamaican-Phoenix

Randall Denley puts out another good article... I can't believe I'm starting to agree with what Denley writes...

http://www.canada.com/ottawacitizen/news/city/story.html?id=aabf2ef4-7d62-4e75-9e92-32412b504608

I know, he's been on a roll lately.

[clynnog]

Originally Posted by d_jeffrey

I know, he's been on a roll lately.

Its scary how often I agree with many of his positions in his articles...I must be getting to be an old man.....soon I'll be listening to CFRA and phoning in to rant on the Lowell Green show.

[the capital urbanite]

even Harper is starting to look good to me....age is a scary thing

[Jamaican-Phoenix]

Meh. He's done not too bad a job as PM, especially with regards to the Military, but I'm really not liking his style of governing or his contempt for Canadian cities; Ottawa in particular...

[lrt's friend]

The thing with the Conservatives is that they are on record to stay out of provincial jurisdiction. This means no new direct support for the cities, no extra funding for health care or higher education. We have already seen their efforts at work with the bus pass credit. Instead of funding transit, they paid existing transit users. Effective???? What cities did including Ottawa, was to raise the price of bus passes (while cash & ticket fares did not increase at the same pace) in order to claw back the credit and claim the federal money in an indirect way. Silly games!

Many voters will appreciate the feds keeping their noses out of provincial matters, but there will be consequences.

[Cre47]

This Conservative government has been very harmful for the city of Ottawa - the only thing done is for road widening for suburban areas which voted Conservatives - nothing good done in areas where it haven't voted Conservative.

[Mille Sabords]

Originally Posted by lrt's friend

The thing with the Conservatives is that they are on record to stay out of provincial jurisdiction. This means no new direct support for the cities, no extra funding for health care or higher education. We have already seen their efforts at work with the bus pass credit. Instead of funding transit, they paid existing transit users. Effective???? What cities did including Ottawa, was to raise the price of bus passes (while cash & ticket fares did not increase at the same pace) in order to claw back the credit and claim the federal money in an indirect way. Silly games!

Many voters will appreciate the feds keeping their noses out of provincial matters, but there will be consequences.

At the same time, Harper is a savvy politician (mind you, a cynical one too). His clawback of the GST to 5% basically frees up a point that any provincial government can choose to channel back to cities. The feds don't need the money, but cities do, and provincial governments are the only ones who can do anything about cities. So what's Dalton gonna do? Raise the PST by one point and throw it back to cities - that would be a positive step.

[eemy]

Originally Posted by lrt's friend

The thing with the Conservatives is that they are on record to stay out of provincial jurisdiction. This means no new direct support for the cities, no extra funding for health care or higher education. We have already seen their efforts at work with the bus pass credit. Instead of funding transit, they paid existing transit users. Effective???? What cities did including Ottawa, was to raise the price of bus passes (while cash & ticket fares did not increase at the same pace) in order to claw back the credit and claim the federal money in an indirect way. Silly games!

Many voters will appreciate the feds keeping their noses out of provincial matters, but there will be consequences.

The problem is, that doesn't do a lot of good for low income people who aren't paying taxes anyway. It's effectively a price increase for the poorest transit users. That's the overall problem with tax credits.

[clynnog]

Originally Posted by Cre47

This Conservative government has been very harmful for the city of Ottawa - the only thing done is for road widening for suburban areas which voted Conservatives - nothing good done in areas where it haven't voted Conservative.

And in what way would this would be different from any other political party that has been elected

[Cre47]

Originally Posted by Mille Sabords

At the same time, Harper is a savvy politician (mind you, a cynical one too). His clawback of the GST to 5% basically frees up a point that any provincial government can choose to channel back to cities. The feds don't need the money, but cities do, and provincial governments are the only ones who can do anything about cities. So what's Dalton gonna do? Raise the PST by one point and throw it back to cities - that would be a positive step.

It should do this, because if not the city will probably have to raise the taxes like 5% or more each year and people will get upset easily, while with the 1% PST, the reaction may be less negative.

-----

Well the Liberals at least have give gas-tax revenues to the cities, it (although election may be a factor) was the party that gave up to the City for transit projects to the tune of $200 million (feds and province each), two major elements with some road projects too.

[p_xavier]

Originally Posted by Cre47

It should do this, because if not the city will probably have to raise the taxes like 5% or more each year and people will get upset easily, while with the 1% PST, the reaction may be less negative.

-----

Well the Liberals at least have give gas-tax revenues to the cities, it (although election may be a factor) was the party that gave up to the City for transit projects to the tune of $200 million (feds and province each), two major elements with some road projects too.

What I woud suggest, since it would be a new suicide for Guinty, is to create a 1%-2%MST, that is voted by the cities of Ontario. That we he will be able to say, I didn't vote for that, your elected municipal electors did.

[lrt's friend]

What I woud suggest, since it would be a new suicide for Guinty, is to create a 1%-2%MST, that is voted by the cities of Ontario. That we he will be able to say, I didn't vote for that, your elected municipal electors did.

I agree. Harper is handing a poison pill to the other levels of Government in order to make himself look so good. Maguinty can't raise the PST or he will be shot so the only hope is a municipal sales tax, which is presently not possible. That is something used in some American cities.

And in what way would this would be different from any other political party that has been elected

Liberals were more sympathetic to municipal issues and they were willing to find ways to get money to the cities. Conservatives are on record to not give money directly to cities, at least not with matching provincial money. In other words, there must be provincial approval.

[Cre47]

It is a bit unrelated, but a LeDroit poll showed that if a municipal election will be held with the same three candidates, Alex Munter would be elected mayor.

Results would have been 38% for Munter, 32% for Very Scary Larry and 24% for Chiarelli (still in third)

Satisfaction rates for the mayor is 51% - which is quite surprisingly high considering all the flops made in the first year.

[Jamaican-Phoenix]

I think Alex Munter should run again next election...

[adam-machiavelli]

I know people who are close to Munter. He won't run again. In fact, word on the street is that he may leave Ottawa (which makes him one of the smarter ones).

[Jamaican-Phoenix]

God, I hate it when all the smart people leave; that means that only idiots are left in this city, and that's not a good thing!!!

[Cre47]

Accoording to the Sun, some councillors are planning to limit the budget debate to a few minutes and that the tax hike will be 4%, though still taxpayers will not lost all the goodies giving by the feds.

It is good for two things, additionnal revenues will go indirectly from the feds to the municipal government and second of all, we will not gonna have to endure lenghty hours of debate and warring between councillors to choose what is best to cut or not.

However, there looks be some cut possible still, and probably the fastest way will be to cut some administrative staff although much fewer then it was planned I think.

[Cre47]

There is a motion for pressuring the feds for 1% of the GST givin to the cities which would provide $70 million for the City of Ottawa, according to Clive Doucet, a good chunk of the budget shortfall.

Seems a protest rally would be organised by some Councillors

[eemy]

Originally Posted by Cre47

There is a motion for pressuring the feds for 1% of the GST givin to the cities which would provide $70 million for the City of Ottawa, according to Clive Doucet, a good chunk of the budget shortfall.

Seems a protest rally would be organised by some Councillors

I like his idea.