Snowing us on the budget

Snowing us on the budget

The budget forged last December was less a budget and more a series of wishes. It did not take into account money for a snowy day."

The Ottawa Citizen, Published: Thursday, March 20, 2008

It is hard to disagree with the suggestion that the taxpayers of Ottawa have been "snowed" in more ways than one recently. After detailing the bizarre tactics engaged by City Council and the Mayor to try to convince us that we really could get something for nothing, The Ottawa Citizen points us in the right direction when it concludes:

We simply need better city budgeting and a better tax system. Property taxes just don't work. They leave cities in constant shortfall. Premier Dalton McGuinty, are you listening?

Long before the dust has settled (or the snow has finally melted in early July) from this current mess we need to start a serious conversation in this city, and in all municipalities across this country, about the structural flaws endemic in our current system of municipal financing.

Canada stands out amongst OECD countries in how it expects urban centres to be financed almost exclusively by the regressive property tax system. Ontario further exacerbates the problem with its imposition of social welfare costs on this strained tax base.

Numerous expert commentators in the arcane area of municipal taxation have pointed this out to us. In Local Taxation: A Comparative Analysis Dr. Harry Kitchen, of Trent University points out that as of 2001 Canadian municipalities derived more than 91% of their total tax revenue from property taxes. In comparison, the average amongst the federal states of the OECD was 48.8% and within the unitary states it was a paltry 31.8% of municipal revenue. Drs. Enid Bird and Richard Slack of the Institute of Municipal Finance and Governance at the University of Toronto tell us that among OECD countries Canada has the highest property tax to GDP ratio in the world, at 4.1%, followed by the U.S. and Australia at 2.9% and 2.5% respectively.(1)

These commentators are not suggesting that we need to stop using property taxes to fund municipal expenditures. They are saying, however, that we need to expand our horizons so it isn't our only source of revenue. Jurisdictions the world over use have reduced their dependence on the regressive property tax system to fund municipalities. Canada, and particularly Ontario, lags far behind in this regard.

For the property taxes that we do collect the Green Party of Ontario proposes that part of the solution lies in moving toward a system that assesses land value, but not the value of buildings and improvements made to such buildings, to determine municipal tax rates. This would vastly simplify the responsibilities of MPAC, as the relative value of building improvements would not be considered in their calculations.

Such a plan would encourage development more along the lines of a municipality’s official plan. Land value is proportional not only to its quantity, but also to the scale and type of development permitted. It would create a disincentive to land speculation, as the property would be taxed according to its full potential for use, as reflected in its assessment and class.

It also would remove the disincentive of higher taxes on home improvement. A property owner is more likely to invest in best building practices, and erect a carbon neutral facility with the threat of higher taxes removed. This enhances not only the value of the building, but the community at large, with cleaner air.

Depending almost exclusively on our current regressive type of tax system understandably encourages short term reactionary thinking on the part of many voters. From year to year a significant number of property owners are justifiably outraged at the level of increase of their municipal tax bill. These increases have no relationship either to their ability to pay nor to the cost of the service being provided. They howl and scream to their councillor, the media, and who ever else will listen. Much newspaper ink is spilt as a media frenzy is created with everyone proclaiming "Our taxes are too high already! We can't afford these increases!" Newspapers are sold, talk radio screams, and local politicians get up on their hind legs and proclaim "Zero means zero!" Meanwhile, our infrastructure crumbles, the snow piles up, and the next news item insists that the feds or the province must help the cities.

What is so fascinating is that all these taxes, be they federal provincial or municipal, are paid by the same taxpayer. Why is it that we continue to believe that if our federal and/or provincial tax rates go down, that somehow, as if by magic, our municipal taxes should go down as well. One of the reasons our income taxes went down was because the higher levels of government thought they could look like tax cutting heroes by ultimately downloading costs onto the most regressive and unbalanced form of taxation, namely the municipal property tax system.

As taxpayers we all need to give our collective heads a really good shake. We have been snowed, not only by our municipal council's failure to engage in effective and meaningful budgeting, but by every politician, be they municipal, provincial or federal, who has promised us something for nothing. As taxpayers to all of these levels of government we need to demand that they start to work together immediately to re balance how our municipalities are funded. The current system was designed more than 100 hundred years ago when Canada was essentially a rural outpost with a few small developing urban areas. Things have changed dramatically since then but our method of funding municipalities, where the vast majority of us now live, has not. A substantive overhaul is urgently required.

Smart homeowners plan for proper maintenance of their homes. Smart cities should be able to as well, and look forward to making the investments needed to ensure the long term sustainability of the place we call home. Only then will we start to bring down our costs over the long term. Fiscal responsibility does not mean spending the least amount of money every year. It means spending the correct amount of money every year, so that in the long term we spend the least amount of money.

City of Ottawa Budget - 2006

Presentation to the Committee of the Whole of Ottawa City Council by Leonard Poole, representing the Community Council of Overbrook

Tuesday December 6, 2005

Good morning, my name is Leonard Poole. I am President of the Community Council of Overbrook and am speaking on their behalf.

Last year, during the 2005 budget consultations, we came to you with a strong message regarding our crumbling infrastructure, specifically the condition of our sewers, which allowed – for the third time in 20 years – raw human waste to enter the basements of many of our homes. It is a very serious problem, not only in Overbrook, but throughout various city neighbourhoods. We demanded action. We shall now report to you on the progress to date. We shall also provide our views on what more needs to be done, not only with respect to infrastructure renewal, but the importance of developing and sticking to a vision of sustainability in our budgetary process.

We did feel heard and you responded. You directed staff to investigate, and develop an action plan. In Overbrook staff identified three areas needing attention. Remedial work is scheduled to begin in the area of Eve and Spartan Avenues in 2006. Design work and consultation will begin for the area of Queen Mary and the Vanier Parkway in 2006, with construction scheduled for 2007. A third identified cluster area requires further investigation.

Some of us in Overbrook are cautiously optimistic that the proposed work may rectify the long-standing infrastructure issue in our community. There are many, however, who question whether or not this will provide us with a level of service that would be acceptable if proposed in newer areas of the city. What is planned in the Queen Mary Street area is replacement of the sewage waste pipe on that street only, with connection to the expanded Rideau River collector. It is suggested that replacement of this one pipe will deal with sewer backup issues on the adjoining streets such as King George, Vera and Glynn. No renewal of the storm sewer system is proposed.

Let me explain our skepticism. There has been a systemic failure to provide a sustainable level of investment in our infrastructure for decades. Backups of raw sewage in Overbrook have been documented for many years, starting in 1956, then again in 1958, 59, 60, 62, 66, 71, 86, 96, and most recently in 2004. The problem was extensively investigated in the seventies and again in the eighties, yet no action was taken. We found the substantial reports gathering dust in the Ottawa Public Library.

We shall continue to follow these proposals very closely. We are determined in our efforts to secure for our community a level of service that is comparable to what is delivered to other areas.

With respect to the budgetary process, we believe it essential that you not only develop but also stick to a vision of sustainability. The infrastructure problem in Overbrook did not happen overnight. We have known about it for fifty years. Yet, the city consistently failed to respond. For fifty years or more the city has lacked a sense of vision about sustainable investment in our infrastructure. For fifty years we have continually fallen back on shortsighted decisions made in an effort to trim costs today, while failing to take into account future long-term ramifications.

We note with alarm, for example, the considerable increase in transit fares. You justify this because you decided that an increased percentage of the cost of transit should be realized from the fare box. However, the long-term implication is that it acts as a deterrent to transit use, driving up the use of individual automobiles, resulting in greater traffic congestion problems, that require ever more investment in a road network and supporting traffic infrastructure. We already spend more per household on roads than any other municipality in this province. We continue to subsidize automobile use with the provision of roadways at no cost to the user. We know that travel by automobile is the least efficient way to move people. By making transit even more expensive, we are assuring ourselves of ever escalating costs into the future, continued reliance on automobiles for transportation, and continued deterioration in our air quality.

To many, the greatest threat to humankind in this century will be degradation of our environment due to global warming. The Federation of Canadian Municipalities recently issued a report concluding that if everyone in the world enjoyed Canada's standard of living, it would take four Earths to supply our needs and dispose of our waste. The City of Ottawa is 19% above that abysmal national average. We need to start designing our cities to take this into account and change our ways. Those cities that continue to use 1950’s thinking by building ever expanding suburbs will be faced with horrendous costs in the future as they scramble to respond to the new reality. More and more of us are beginning to recognize this and are starting to plan our lives around minimal automobile use. We need to incorporate renewable and sustainable thinking into every decision we make. Increasing transit fares is one example of a step in the wrong direction.

Sustainable thinking means moving away from decisions that are short term and satisfy only our immediate needs and desires. It means placing greater emphasis on the quality rather than the quantity of growth. It means thinking long term and recognizing that we have a responsibility to ensure that we leave a manageable and sustainable legacy for our future generations.

We conclude with our definition of fiscal responsibility:

It means making appropriate investments today to ensure that in the long term we spend the least amount of money.

Presentation to the Committee of the Whole of Ottawa City Council by Leonard Poole, representing the Community Council of Overbrook

January, 2005

Good morning, my name is Leonard Poole. I am President of the Community Council of Overbrook and am speaking on their behalf.

I am here to discuss infrastructure neglect, specifically the continual failure of our neighbourhood sewage system. I shall detail the history of this failure, the serious repercussions for our community, and how this is indicative of the city failing to live up to its commitments of smart growth.

When the village of Overbrook was developing during the First World War the Holt Commission had already documented the problem of flood control of the Rideau River. In 1950 Overbrook was annexed from Gloucester Township, leading to considerable residential growth. With this growth, however, also came recurrent sewer backup problems. Although more demand was placed on the system, the sewers themselves were never upgraded beyond a combined, or partially combined system. Backups of raw sewage occurred frequently.

The most recent event occurred this past September when, for the third time in 20 years, we were told that we had been hit with a 100-year flood. To be blunt, this explanation was beginning to wear a little thin.

It is one way to galvanize a community. Over 100 people attended a public meeting held in late October when they questioned city staff and our councilor. Unfortunately, what we were told was that we should think of our homes as “leaky boats” that we had to repair. It was also suggested that the cost of the needed upgrade could likely be far beyond the ability of the city to pay. Finally, the City told us that after the Universal Program Review, some residents of Overbrook, will be assessed a surcharge on their municipal taxes as they are deemed to benefit from flood control of the Rideau River. Some benefit!

The residents of Overbrook did not take too kindly to these suggestions. Here are some of the comments that I can repeat: “It is the 21^st century; I shouldn’t have to deal with sewage in my basement. End of story.” Or, “This is Ottawa. We don’t live in a third world country. We deserve better.” In fact, no one on this planet deserves to be subject to the flooding of his or her home with human waste. It is a deplorable situation that presents severe health risks and requires immediate attention.

Lets detail the specific problems:

Health Risks:

Property contaminated with sewage must be discarded immediately. I would appreciate comments from our own Medical Officer of Health with respect to problems caused by our citizens using furniture contaminated with fecal matter. For days there were dozens of piles of discarded household items left at the curb throughout my neighbourhood. It took weeks to get the city to remove this dangerous debris.

Insurance:

There are numerous reports of residents being told they are no longer insured for this kind of damage because it is repetitive.

Dislocation:

Many property owners continue to effect repair to their property. Families were dislocated for weeks, and months.

Financial Cost:

Damage costs in excess of $60,000 per household have been documented.

Long Term Cost

Many residents of Overbrook understand the long-term value of curbing urban sprawl through increasing density in the inner city and want to be partners in this process. However, it is proving to be an unequal partnership as our taxes pay for new infrastructure in ever expanding, and costly to serve suburbs while we don’t have basic infrastructure that works. These expansive suburbs then demand ever more costly and inefficient road systems to bring ever more cars into and through our inner city. And then we are expected to welcome increased density in our neighbourhoods, which leads to ever more sewage that cannot be removed.

As President of the Community Council of Overbrook I have urged our residents to embrace the 20/20 vision of the Official Plan. Unfortunately, more and more people are saying no to increased density, as they are afraid of the strain it places on our sewers. Some are saying no to absolutely any investment in arts, culture, social programs, transit, or anything else until this problem is addressed. They make it clear that they share my belief that these are all valuable components of a city they want to live in, but say we MUST have the basic of proper sewers in place first. Is there anything more basic than the removal of human waste?

Last year during the budget debate we offered the following definition of Fiscal Responsibility. “For some it means spending the least amount of money, every year, and do whatever it takes to avoid a tax increase. In our view, it means spending the correct amount of money today to ensure that in the long term we spend the least amount of money.”

20 years ago governments were often accused of stealing from our children as we ran up massive deficits, spending like drunken sailors to pay for our excess. Today, I submit we can be accused of the same thing, except for exactly the opposite reason. Now we are in danger of handing our children a legacy of a crumbling city, as we refuse to accept responsibility to pay our share, by ensuring that we provide proper stewardship of our infrastructure. It is our belief that we shall be doomed to catastrophic cost increases in the near future if we do not make the necessary investments today.

City of Ottawa Budget - 2004

Presentation of the Community Council of Overbrook to the Economic Development and Corporate Services Committee of Ottawa City Council

Scheduled for 12:05 PM Monday, March 1, 2004 Andrew S. Haydon Hall – City Hall

Good afternoon. My name is Leonard Poole and I am speaking on behalf of the Community Council of Overbrook.

We understand that our municipal tax system is a multi-headed monster that needs to be brought under control. We realize that it creates incredible distortions, often pitting taxpayers, and tax classes against each other. We strongly urge the city and province to work together immediately to develop a more equitable tax system. However, I only have five minutes, not the five hours needed to dissect that beast further, so I will leave it for now.

Today I intend to focus on one topic, that of Fiscal Responsibility. We believe that taxes can be kept at their lowest level when Ottawa City Council demonstrates Fiscal Responsibility. It is our belief, however, that this budget is Fiscally Irresponsible.

How could that be, you might ask? It proposes no tax increases, and keeps our costs down! What it comes down to, essentially, is how you define “Fiscal Responsibility”. For some of us, and perhaps some members of this committee, it means spending the least amount of money, every year, and do whatever it takes to avoid a tax increase. In our view, it means spending the correct amount of money today to ensure that in the long term we spend the least amount of money. This budget is irresponsible because it focuses on short-term gain as opposed to long-term payback.

To pick one example, out of many available, cutting funding to outdoor rinks is a fast way to put almost half a million dollars to the bottom line, and a few cents in each taxpayer's pocket, in the short term. However, the effect of the withdrawal of that investment is that our citizens, particularly our youth will have reduced opportunity for physical exercise and positive social behaviour. We need to understand that those groups of ten or twenty teenagers who were playing a game of shinny, for a couple of hours on a Tuesday night, are now going to be looking for other things to do. This situation will be multiplied at every rink in every community across the city every night during the winter. If these rinks curtail one swarming, or one stolen car joyride, they are worth it. I expect they curtail much more. It is much more expensive to control and police such behaviour after the fact. One high-speed joyride easily leads to incalculable costs. It is not difficult to see that cutting half a million dollars in rink expense can quickly lead to a substantial increase in police expense. And that expense will multiply every year. This is but one example. A cut in one area, will have an effect in another area. You reduce buses, you increase the use of cars, which increases the cost of road repair, you reduce senior home visits, you increase senior's isolation and the strain on our health care system. Whenever you view a cut, you have to consider what other costs will increase.

So often we hear that we have to cut the frills. There are a number of people, including members of this committee, who believe that this budget proposal is an exercise in cutting those “frills”. On one level, they are correct. Be it swimming pools, rinks, flu shots, crisis intervention, festivals, planting flowers, sweeping our streets, funding OCRI, or libraries, our lives will go on without them. And if we go through with these cuts, every taxpayer, this year, will have extra money in his or her pocket. But if you are prepared to pass this budget as it currently stands, you also must face the reality of the effects of these cuts. And the reality is that they will lead to substantial increased costs and reduced revenue in the years to come. Eliminating funding to arts and culture will reduce tourism. Eliminating recreation services will increase policing costs in future. Reducing funding to transit will increase the cost of road repair, as more cars hit the street. Therefore, when you, as a politician, stand up and shout out how you “saved” the average taxpayer money this year, also have the courage to accept responsibility for substantially increased costs in the years to come.

This budget is fiscally irresponsible, in that it focuses on a short-term payment to its shareholders, as opposed to keeping its eye on the long-term vision of prudent management. This budget represents the ESE view of economics, otherwise known as the Enron School of Economics. That mythical school tells us to keep the shareholders happy with short-term paybacks, and hopefully they won’t notice that the business itself is collapsing. Seriously though, any enduring enterprise is forever mindful of a long-term vision that will ensure keeping costs down over the long term. This budget is a recipe for much higher taxes in the future, as it guarantees that we will have to invest in higher cost solutions to social and economic problems that will be the inevitable result.

In conclusion, we implore you to make courageous choices that ensure that our future taxes will not rise astronomically to pay for short-term payouts today. In other words, don’t follow in Mike Harris’s footprints and try to bribe us with our own money as he did in October 2000 with these $200 cheques. Each of you is fully aware of the more than five billion dollar legacy he left behind. We couldn’t afford it then, and we can’t afford it now.