Sunday, June 23, 2013

Lessons I Hope We've Learned from This Year's Budget

Now that the tax notices have been sent, there's been quite a bit of feedback on the impact on both residents and business owners.  Most home owners are facing a higher increase due to the flat taxes - the Pineview Terrace levy of $27, the $60 flat tax set a couple of years ago which has an undefined purpose, but which has been used in both previous years to balance the budget, and the new $189 flat tax which is directed to road repair and maintenance.  Flat taxes have a greater proportional impact on lesser valued properties - only high value properties will have seen a lower than average increase.  In my own case, our property taxes have increased by 19%.

This, of course, pales in comparison to the impact on businesses, particularly small businesses, where flat taxes have the same higher proportional impact as on lower value homes.  Unfortunately, administration didn't provide specific examples of what the effect would be, but when I did some rough calculations based on how the $60 flat tax had translated into taxes on businesses from $300 to $3,000, it wasn't difficult to make the assumption that tripling the flat tax was going to hit small businesses pretty hard, and I said this before each budget vote, but to little effect, unfortunately.  My motion to remove the $60 flat tax and put it back into the mill rate calculations was also unsuccessful.

As I said in an earlier blog, I don't like flat taxes, but I support the two directed flat taxes because they will be dedicated to set, and necessary, purposes, not used to balance the budget.  The road maintenance flat tax was the only option that we could think of to make up for past neglect and misspending.  If this tax proves to be more than we need for a year of work, then it can be reduced in the future.  And the Pineview Terrace levy will be gone after 2015.

Tax increases are never popular, of course, even when they're necessary, but I hope that, as a council, we've learned from the almost universal negative response that we've received, whether formally, in the press, or in our casual encounters, and that we use this learning in next year's budget process.

First, we need to look at the whole budget, including the base budget, at the start of the process.  Even this year, only a few things were taken out of the base budget, and that was because they were specific unnecessary expenditures identified by council members.  But when you don't see all the details, it's really hard to identify all of the savings that could be made.  In some places, zero-based budgeting is the norm, and I'd really like us to start there.  That's when every expenditure made by the city is identified, and justified, before being approved.  Our administration tends to start with last year's budget, and add to it, rather than looking at current spending and seeing where we could spend less.

I think that an overall personnel review is long overdue.  It seems that new positions are often created, but we rarely look at reductions in positions, even when attrition makes it possible to do so without affecting an actual person.

There should be no sacred cows in the budget.  Just because we have always done things a certain way, or spent money on certain things, doesn't mean that these things should continue without there being any scrutiny of the need, or the method.

We need for administration to give us a better picture of the impact of proposed tax increases, for both residents and businesses.  I think that often, because we're elected by the people who live in our wards, not by the businesses that are located there, we don't worry as much about the effect of our various decisions on the businesses that are necessary for the health of our community.  We often talk about the quality of life that the various recreational and artistic facilities provide - a broad spectrum of healthy businesses in a community is even more important to our quality of life.

And, as always, let's not be afraid to ask questions if we're not clear on something, or if something seems too good to be true, like the idea that reassessment wouldn't cause tax increases.  Why people thought that if the value of your property went up, your taxes wouldn't also increase, is one of those "if it sounds too good to be true, it probably is" things.  Let's ask for definite proof, rather than just hearing what we want to hear.

Every year is a learning experience, but it can only benefit our city if we take and apply what we've learned, rather than hoping that people will forget before the next election.

"What is the difference between a taxidermist and a tax collector?  The taxidermist takes only your skin." - Mark Twain

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