Paul Pagnuelo's presentation to City Council, 4 Sep/01
Is amalgamation working?
...add your comments here:
City of Kawartha Lakes
Lindsay, Ontario
Dear Mayor and Councilors,
I had wanted to appear before you today but unfortunately, a conflict in my schedule precludes me from doing so. In the circumstances, I have asked Councilor Dave Marsh to distribute a copy of my letter to each of you and to read it at this afternoon's Council meeting.
Today, you will be asked to approve our new City's first budget. This is both an important and crucial event. It is in this context that my remarks will be directed.
There are several issues that I wish to address in respect of the budget. These include:
· The contents of the proposed Fiscal 2001 operating and capital budgets.
. The tax shifts resulting from the amalgamation of services.
· The need for Council to revisit all commitments it has made that will have an impact on future years budgets.
. The budget process itself.
I had the opportunity a week ago last Wednesday to review the operating budget that initially had been proposed. My reaction, as a professional in the financial services industry for over 36 years and as the former Ontario Director of the Canadian Taxpayers Federation, was one of complete astonishment.
Yes, there was a lot of paper and numbers but no where could I find any supporting information on the programme expenditures you are being asked to approve. Sound budget management and the fiduciary responsibilities you have as members of Council dictate that programme details for both the operating and capital budgets should be reviewed and approved using a zero base budget approach. There was no evidence that this is the process you are following. For Council to consider and adopt the budgets on a line expenditure basis only without debating the component detail is like sailing a ship without a compass.
In reviewing the bare numbers alone, what struck me the most were two issues. First, it was difficult, if not impossible, in many cases to reconcile last year's numbers to those for this year on the basis that the data was presented. Secondly, it was quite evident that the savings projected by the Restructuring Commission, which were to be $3.3 million less than 1998 expenses within two-years of implementing a single tier structure, are no where to be found.
The second issue that I wish to address is the tax shifts that will occur between the former municipalities because of amalgamation. How many of you can provide a logical or defendable response to the question as to why taxes for the residents of some of the former municipalities will skyrocket dramatically, while those for others will decrease proportionately.
There is none that can be provided. Merging or amalgamating municipalities does not increase the overall size of the tax base. There is no justifiable defence for tax shifts as the services provided previously at the County level will continue to be recovered at a common tax rate that applied to all ratepayers on the basis of assessment. It is only the services that are being amalgamated at the former lower-tier level that are causing the shifts. After allowing for area rating of transit, fire, police and waste, it is clear from the property tax impact analyses that I have conducted that the tax shifts, many of which are significant, have nothing to do with benefits accruing to those former municipalities whose taxes will increase. Rather they are nothing more than a veiled ploy to shift the tax burden so that taxpayers in those municipalities that were efficiently run or demanded less service, subsidize the higher costs in those municipalities that either were run inefficiently or are more service demanding.
Tax increases for some former municipalities resulting from a mere shifting of the boundaries because of amalgamation are unfair and run contrary to the provincial government's objective of lower costs and taxes. There should no tax shifts at all until it can be demonstrated that service delivery costs are brought down to their most efficient level in each of the former municipalities and that each of the former municipalities are receiving equivalent service. Where service levels differ, they should be area rated. All cost reduction savings resulting from amalgamation should be applied to offset the tax increases projected for certain of the former municipalities, and any remaining tax shifts that are defendable should be phased in over an eight year period as provided for by provincial legislation.
In approving this year's budgets and the impact on taxes, Council needs to give consideration to new expenditure commitments it has already approved that will affect future years budgets. A case in point is the recent decision to provide the Ross Memorial Hospital in Lindsay with $7 million in funding for capital expansion. To begin with, hospital funding is a provincial/federal responsibility and not a municipal government one. For City Council to commit municipal property owners to pay for the hospital expansion through property taxes opens a Pandora's box. It sets a very dangerous precedent to fund future social services from an already strained property tax system. To compound matters, City Council has no mandate to decide the issue. It should be put to the residents of the City by way of a referendum as provided for by Ontario's Direct Democracy Through Municipal Referendums Act. Many of the wards in our City fall in the catchment area of other hospitals located in Port Perry, Bowmanville, Oshawa, Peterborough and Minden. To expect taxpayers that use these hospitals to fund another hospital they don't use is patently unfair. If Council wants to fund the expansion at the Ross Memorial through our property taxes then it should do so but only to the extent that a majority of taxpayers in those wards who are in favour are willing to absorb the cost. Wards that do not favour the funding commitment should not be expected to share the cost. Citizens across the province have historically played a role in the fundraising efforts of their local hospitals through individual and corporate charitable donations. And in doing so, they are provided with a charitable tax receipt that they can offset towards their provincial and federal income tax. But using the property tax base is quite a very different matter.
The last issue that I want to touch upon is the budget process itself. Budgets should be established before a fiscal year begins and not eight to nine months into the year. While I appreciate there is an eagerness to move forward and finally approve a budget for the current fiscal year, there has been inadequate public consultation and Council must open the debate to public hearings before it gives any final approval.
As a new Council in a new city, it is paramount that you review the relevance of all non-provincially mandated programmes and services being offered at the municipal level. You must rethink the City's social, economic, environmental and fiscal objectives, shedding low priority ones that are no longer affordable or which should not be within the municipality's purview. If the policy decision is that certain programmes or services cannot be terminated, then they should be reviewed to see if they can be redesigned to meet their objectives at a lower cost or if alternate service delivery can improve service quality and/or lower costs.
I thank you for the opportunity to make some of my thoughts known and trust that you will give full consideration to the impact that your budget deliberations will have on the economic well being of local taxpayers. In closing, I wish to say that Council must react sensibly and compassionately on the issues of tax shifts and expenditure control. Otherwise, it runs the risk of turning friends and neighbours against each other and creating permanent hostilities that will make our new City an unpleasant experience for all.
Sincerely,
VOCO main page
