New Land Transfer Tax

[dowlingm]

There are two interesting things about the audit of Toronto Water.

1. Hizzoner always says "Toronto is audited up the wazzoo" but that's not worth much if the money is already wasted and unrecoverable and the waste doesn't get fixed.

2. Toronto Water is paid for by water bills which increased 10.8% this year (which was supposed to be 9 but had to be 10.8 due to a screwup where they forgot when the budget is implemented) and due to increase by 9% next.

 

[rbt]

There are two interesting things about the audit of Toronto Water.

1. Hizzoner always says "Toronto is audited up the wazzoo" but that's not worth much if the money is already wasted and unrecoverable and the waste doesn't get fixed.

2. Toronto Water is paid for by water bills which increased 10.8% this year (which was supposed to be 9 but had to be 10.8 due to a screwup where they forgot when the budget is implemented) and due to increase by 9% next.

Sure. That seems bad until you realize why.

1) Decision to no longer subsidize water prices with property tax revenues. User pays for utilities is a good thing for conservation efforts.

2) Old infrastructure needs replacements. Ottawa, Hamilton, and Vancouver are also boosting rates pretty rapidly. Pretty much anybody with 50's infrastructure is in a rush to deal with water main breaks and rebuilds.

3) New provincial rules, thanks to Walkerton. More testing and maintenance requirements.

Doesn't mean that issues found in audits shouldn't be corrected but 99% of the funds collected are being spent appropriately. More than I can say for my own budget.

A few think-tanks and university profs are encouraging cities, particularly Toronto, to triple current water rates primarily to keep up with infrastructure requirements.

 

[dowlingm]

rbt - I have no problem with treating water as a utility, and with TW raising funds to replace 100 year old mains that leak 1/3 of the water. I'm just saying that a department raising rates this fast has to be careful about its costs to avoid even higher rates.

 

[rbt]

I'm just saying that a department raising rates this fast has to be careful about its costs to avoid even higher rates.

Okay, makes sense. I'm used to getting a "they should privatize it instead" argument which would, of course, result in doubling the bills overnight even if they make the system 25% more efficient.

For some reason I thought your statements were leading somewhere. My bad.

 

[unimaginative2]

Controversial tax plan in the hands of swing votes
'The mayor's office is trying to make me feel warm and fuzzy,' says undecided Councillor Milczyn

JENNIFER LEWINGTON

CITY HALL BUREAU CHIEF

October 15, 2007

With one week to go before a momentous tax debate at city hall, the spotlight shines on a half-dozen Toronto councillors still undecided if they will vote for Mayor David Miller's new "revenue tools."

Over the next few days, negotiations are expected to intensify between the mayor's office and key swing voters on council for a possible consensus to approve a land transfer tax on the purchase of a home and a car registration fee for 2008.

One of those in the limelight is Peter Milczyn (Etobicoke-Lakeshore), a political centrist who votes with, and against, the mayor, depending on the issue. His vote could mean victory or defeat for Mr. Miller.

"The mayor's office is trying to make me feel warm and fuzzy," says the veteran councillor with a wry smile. First elected to local politics in 1994, he lost in 1997, but has represented his upscale west-end ward since 2000.

In July, Mr. Milczyn was one of 23 councillors who snubbed the mayor by a one-vote margin to defer his controversial tax package until Oct. 22. Mr. Milczyn has not tipped his hand for next week.

But the 42-year-old politician, who says he has had "blunt discussions" with Mr. Miller in recent weeks, makes no bones about what could turn his vote.

"Cost reduction is the key thing for me," says the Etobicoke native, an architect by profession.

He wrote to the mayor right after the deferral vote with suggestions, ranging from symbolic cuts in areas that grate with the public (council perks and office budgets) to structural changes (no bonuses and salary caps for non-union city staff and a move to turn the water department into a quasi-privatized agency).

He says the mayor's office has assured him, " 'We have heard what you are saying,' but I told them I need something tangible."

Other swing voters, including Suzan Hall (Etobicoke North), Mark Grimes (Etobicoke-Lakeshore), and Ron Moeser ( Scarborough East), have their own wish lists.

As the Toronto Real Estate Board and other anti-tax business groups step up their lobby efforts this week, Mr. Miller's challenge will be to coax enough councillors on board without gutting the revenue tools.

On paper, the land transfer tax of up to 2 per cent (a sliding scale tied to the sales price of a house) and a $60 fee to register car ownership could generate $356-million a year in total. Already the July deferral and implementation delays have shrunk the pot to $250-million, which could sink to around $200-million if council adopts all the "refinements" under discussion.

Allies of the mayor believe Mr. Miller can craft a satisfactory compromise to pull off a victory next week.

"The reality is that the right wing's hold on those 23 votes is a lot less firm than Miller's hold on his 22," said Councillor Adam Vaughan (Trinity-Spadina), standing by a prediction he first made in late September.

But Councillor Karen Stintz (Eglinton-Lawrence), a critic of the mayor, is skeptical.

"If there is a compromise, we should be able to talk about what that is," she said, noting there is no package to look at yet.

Mr. Milczyn, a member of council's budget committee in Mr. Miller's first term, has no illusion about the city's fiscal problems. But after the 2006 election, he said, he turned down an offer to serve again.

"I spent three frustrating years on the budget committee," he said. "When anything remotely controversial was tried, it always got voted down and frankly the mayor never supported those kinds of things."

Aside from writing to the mayor, Mr. Milczyn has held a town-hall meeting on the taxes, with Mr. Miller on hand, and sent out a survey to residents. Surprisingly, he said, some residents are willing to pay higher property taxes than to stick it to home buyers with the land transfer tax.

Pharmacist Barry Phillips, who owns a store near Bloor and Royal York, is delighted at his councillor's cost-cutting theme.

"They are not looking at where we can save," Mr. Phillips said of city officials. "They are looking at what kind of services do we provide to what area that needs it."

As Mr. Milczyn prepared for the tax vote, he recalled his first tough vote when he was a 29-year-old rookie on the pre-amalgamation Etobicoke council. He backed a slim majority to approve contracting out garbage collection.

Then, as now, he said, "you have to look at things coolly, rationally, pragmatically."

Faced with approving new taxes, Mr. Milczyn said, "you have to consider really seriously what you are doing, how you are doing it and why... What I am struggling with is the why."

"I don't believe we have done everything we can to reduce expenses."

Possible deal makers

Nothing is set yet, but a deal for a yes vote on new city taxes could include one or more, but not all, of these:

More generous rebate for first-time buyers of new and resale homes. Some councillors want the rebate to apply to homes valued at or below $400,000, up from the current $227,000.

Lower rate for the land transfer tax, which now starts at 0.5 per cent for the first $55,000 in property value and rises to 2 per cent for homes valued above $400,000.

Grandfather home sale transactions before Oct. 22.

Little or no change in the $60 car registration fee, given suburban councillor opposition to raising it to the provincial level of $74.

Though not directly tied to a vote on taxes, an announcement is expected this week on the possible creation of an outside review panel to look at the city's books. Any move to impose deeper spending cuts or higher property taxes (above 3.8 per cent levied this year) will likely be tied to next spring's budget.

 

[unimaginative2]

Library cuts may have backfired, board says


Oct 15, 2007 11:19 AM
Jim Byers
Toronto Star

Mayor David Miller's cost-saving plans appeared to take another hit today after the city's library board said it may have to pay unionized workers for wages and benefits lost by its decision to close 16 libraries on Sundays.

The announcement came just two weeks after city council reversed a cost-saving measure that suspended community centre programs on Mondays.

Library board officials said they were notified last week that the Toronto Civic Employees' Union (CUPE Local 416) had won a grievance filed against the board over the Sunday closings.

On Sept. 9, the board began closing some branches on Sundays as part of an effort to save $1.2 million over the remainder of this year and help the city deal with a massive budget shortfall.

The library board approved the Sunday closings at a meeting in July. At that time, officials say legal staff advised them that the reduced hours wouldn't violate the board's collective agreement.

In a statement issued today, board officials said they could not comment because they hadn't seen the wording of the grievance.

The issue is scheduled for discussion at Monday night's library board meeting.

The news comes at a bad time for Miller, who's trying desperately to convince reluctant city councillors to support his plan for a new land transfer tax and a vehicle registry tax.

Council is slated to vote on the tax plan next Monday.

Councillor Karen Stintz, a vocal opponent of Miller's tax plan, said the library news is just the latest in a series of missteps by the mayor.

"First they backed down on community centres, then MasterCard, thank goodness, came to the rescue and gave us money to keep the ice rinks open, and now this with the libraries," she said.

"There's a level of ineptness and incompetence that doesn't serve the city well when we're trying to make a case that we're a mature level of government."

 

[unimaginative2]

Toronto Star

'Home stretch' for city tax vote

Both sides of debate on vehicle registration and land transfer tax gear up for final week of lobbying
Oct 15, 2007 04:30 AM
Donovan Vincent
City hall bureau
Toronto Star

It's a week to go until the crucial Oct. 22 vote at city hall, and groups for and against the land transfer tax and vehicle registration fee are strategizing over how best to influence councillors.

"Clearly we're in the home stretch. This is a critical time," said Von Palmer, a spokesperson for the Toronto Real Estate Board, a group vehemently opposed to the house purchase tax Mayor David Miller wants to implement to address the city's serious revenue shortfall.

Leading up to the July vote at city hall on the two controversial taxes, groups like the real estate group and Toronto Board of Trade lobbied councillors heavily.

They packed council chambers the day of the vote, and their strategies played a huge role in influencing the 23-22 council vote to defer a decision until this month.

This time, groups that rely on city money to provide community services are also mobilizing forces.

Representatives of 18 community groups met Friday to come up with a plan to counter anti-tax groups.

They plan to contact 1,500 community organizations across the city, lobby councillors and to be out in full force at city hall for the vote.

Friday's meeting chair, Maureen Fair, executive director of St. Christopher House, a neighbourhood support centre, said in an interview that while no one likes new taxes, the two under consideration are the "lesser of two evils" – the other being cuts to community services.

"I think these taxes are unfortunate, but we were surprised by the reaction to them from certain groups," she said.

The controversy over closing community centres on Mondays – Miller and councillors voted last month to back off that cost-containment measure – shows the public doesn't want cuts to community services, Fair said.

Rob Howarth, who heads Toronto Neighbourhood Centres, an association of about 30 multi-service organizations in the city, says programs such as those for youths, seniors and immigrants could be in jeopardy if the taxes aren't passed.

But Councillor Chin Lee says no amount of lobbying will change his opposition to the taxes.

"We need to go to the federal and provincial government to upload (the cost of social services)," he said.

The Real Estate Board's Palmer said his group is organizing a panel discussion Thursday with anti-tax councillors Denzil Minnan-Wong, Case Ootes, Mike Feldman and Michael Thompson at the Toronto Congress Centre on Dixon Rd.

"We want to hear from supporters, those councillors who don't want the land transfer tax. But we also want to hear what other options (to the tax) are available," Palmer said.

His group is also still lobbying councillors, and has set up a website – nohomebuyingtax.com – where visitors can type in a price for a home and see how much they'd have to pay to buy it if the new land transfer tax was implemented.

"We're trying to raise public awareness of the (land transfer) tax," Palmer said, adding the public doesn't support the measure. To back up the claim, he said 99 per cent of the 4,500 emails to the website were against the tax.

 

[allabootmatt]

...and yet again, no one offers an alternative solution that includes numbers and dollar signs adding up to the amount of the operating deficit. Until someone does, I will have very little respect for the Council 'opposition.'

 

[Glen]

...and yet again, no one offers an alternative solution that includes numbers and dollar signs adding up to the amount of the operating deficit. Until someone does, I will have very little respect for the Council 'opposition.'

http://torontosun.com/News/TorontoAndGTA/2007/10/14/4575038-sun.html

We found some $440.9 million -- $419.4 million from what I've called the Big Ticket Items like wages and benefits. There was another $21.5 million from what the socialists like to call "chicken feed" -- the small yet symbolic cuts to councillor office budgets, their wage hikes and free food, the city's grants, special events, cultural and plant watering budgets that Coun. Rob Ford raises year after year.

I believe we barely scratched the surface. We deliberately avoided the city's generous union contracts, which come up for renewal next April. The mayor should be talking concessions but won't given his close ties to CUPE.

Nevertheless, here's how we arrived at the $419 million:

 

[lordmandeep]

i do fail to understand how the city spends 8 billion dollars....

OKay forget that, how does it climb 2 billion dollars.


The city has not grown by 25% has it no....

 

[Junglab]

Alright... since no one else posted it, I will - the Sun's Rx for what ails ya, in all its glory:

Nevertheless, here's how we arrived at the $419 million:

NOT-SO-FAIR WAGES: The fair wage policy -- which demands all companies wanting to do business with the city pay close to union wages -- is one of the biggest areas to crack. The city's own reports show that at $42.58/hr., Toronto's average "fair" wage is $15 above the provincial average and $8 above Oshawa's. Based on a figure of $1 billion for city contracts requiring the fair wage, we lowered the average rate by a conservative $5 for savings of $123 million.

This is probably the most useful of the propositions, which is why it gets top billing. I'm really not sure where the $1 billion figure comes from though...

NOTE THIS: Eagle-eyed Del Grande discovered a note in the report that Toronto Hydro will repay its $980-million loan from the city starting with $245 million on Dec. 31. CFO Joe Pennachetti told me the money will be put in a Strategic Infrastructure Fund to pay for the waterfront, the Spadina subway and environmental projects. It seems about $90 million of that will be used to fund the mayor's pet Climate Change Initiatives, like a $42-million energy conservation fund and a $20-million Green Energy fund -- shameless, given that he opted to delay opening hockey rinks until January and to close community centres on Mondays. I took the $90 million to help plug the deficit hole. True, it's a one-time fix, but Miller already set that precedent by selling off $60 million in hydro poles in 2005 to balance the books.

Two wrongs do not a right make. I think its high time one-shot deals went the way of the dodo in this debate... and people (just not the Sun kinda people) seem to want more and beter environmental measures. Plus, I beleive that the environmental agenda was supported by a majority of councillors, was it not?

WAGES? TAKE A HIKE: It was generous enough that the city handed its 47,000 unionized employees a 3.25% wage hike last year. But according to the report, the wage bill increased 5.5% to account for merit pay and overtime. We knocked off that extra 2.25% for a savings of $86 million. Using the same figures, we also implemented a wage freeze for all of the city's non-unionized employees (about 20% of the workforce) for a savings of $18.9 million and cut their generous benefits (about 25% of the wage bill) by 4% for another $7.8 million in savings.

Fat effin' chance. Even if you agree with the Sun on this one, the chances of this going through are much akin to those of a snowball luxuriating on a lawnchair in Hades.

TAXES? A NECESSARY TOOL: We figure Premier Dalton McGuinty will make good on his promise to upload $38 million in social service costs next year. We opted to share the pain and raise property taxes by 6% for an extra $33 million. We also assumed there'd be $20 million in assessment growth from the rash of new condo developments across the city.

Same deal with Miller et al. Nothing new here... It's not like Miller isn't factoring this in.

DEBT WASTE: Council's recent decision to purchase $54 million in new recycling and residual waste carts next year makes Waste Diversion Toronto's Rod Muir bristle. He thinks it's evidence of "Miller in Microcosm ... spending on stuff that seems to benefit city workers more than anything." We axed the $54-million proposal, which will be debt financed at around 5%, for a savings of $2.7 million in interest costs and went with Muir's suggestion to use bag tags (at 15 cents each) instead.

Another example of a political shot. This program was supported by a majority of council, and it ain't going anywhere.

Del Grande challenges Miller & Co. to take a look at these cuts before he goes to taxpayers for more tax money -- that this proves the city is not as efficient as the mayor and his media mouthpieces constantly maintain.

"It's like an onion ... you have to continually peel," he said. "You have to look under the numbers and question the numbers."

SUMMARY

PLUGGING THE CITY'S DEFICIT HOLE

BIG TICKET ITEMS

1. Reduce city's average fair wage rate of $42.50/hr. on $1 billion of contracted-out services by $5 to bring it more in line with province and other GTA cities.

SAVINGS: $123 million

2. Use $90 million of $245-million Toronto Hydro note, which comes due Dec. 31 and will be allocated to mayor's Climate Change Initiatives.

REVENUE FIX: $90 million

3. Eliminate 2% wage hikes for merit and OT over and above the 3.25% negotiated (2006) increase contained in the $3.8-billion wage budget for last year.

SAVINGS: $86 million

4. Implement a wage freeze for city's non-unionized staff (about 20% of the total head count).

SAVINGS: $18.9 million

5. Cut non-unionized benefits by 4% (from 25%).

SAVINGS: $7.8 million

6. Provincial upload committed by Premier in election.

REVENUE FIX: $38 million

7. Raise property taxes 6% to spread the pain (3% more than expected).

REVENUE FIX: $33 million

8. New assessment on 10,000 condo units coming on stream in 2008.

REVENUE FIX: $20 million

9. Cancel $54-million capital purchase of garbage carts and bins and use bag tags (at 15 cents each) instead. Savings would be on debt financed at 5%.

SAVINGS: $2.7 million

TOTAL BIG-TICKET ITEMS: $419.4 million

The Sun has saved the best for last...

THE CHICKEN FEED CATEGORY

1. Reduce councillor office budgets by $23,100 to $30,000.

SAVINGS: $1 million

2. Roll back wage hikes given to councillors and the mayor in 2007 (over standard 1.9% COLA increase).

SAVINGS: $284,740

3. Cut council's free food and coffee.

SAVINGS: $80,000

4. Cut council conference and travel budget.

SAVINGS: $50,000

5. Cut council grants budget by 10%.

SAVINGS: $4.1 million

6. Cut Tenant Defence fund grants by 10%.

SAVINGS: $6,700

7. Cut culture and special events budgets by 10%.

SAVINGS: $2.1 million

8. Cut plant watering service in city buildings.

SAVINGS: $77,000

9. Eliminate Toronto Water radio ad campaign Re: Summer lawn watering.

SAVINGS: $210,000

10. Eliminate door-to-door waste and water newsletters.

SAVINGS: $665,000

11. Cancel lobbyist registry.

SAVINGS: $400,000

12. Cut Clean and Beautiful City program (including secretariat).

SAVINGS: $1.6 million

13. Recoup half the cost ($54.50) of the 18,860 free monthly Metropasses given to TTC employees, retirees, councillors and assorted others.

REVENUE FIX: $11 million

TOTAL CHICKEN FEED: $21.5 million

GRAND TOTAL: (Ka-ching, ka-ching) $440.9 million

 

[RedRocket191]

Alright... since no one else posted it, I will - the Sun's Rx for what ails ya, in all its glory:

Easy for a newspaper to say that form its King East office. I'd like to see them sit in the mayors chair and say that with several million people waiting to scream at you...

Excellent post!

 

[unimaginative2]

Some of the big-ticket items make sense, but the "Chicken Feed" ones are just ridiculous. They're obviously this modern populist "bash the politicians for everything" stuff, but honestly, we expect our councillors (whatever we might think of their politics or them personally) to work late into the night for a mediocre salary, and we aren't even willing to give them free coffee? I mean, every office has a coffee machine.

 

[Hydrogen]

I mean, every office has a coffee machine.

I've gotta bring this up with my employer.

 

[Edward Skira]

We're not the only ones feeling the pinch.

CHICAGO, Oct. 17 — Suddenly everyone wants more from Chicago’s taxpayers.
http://www.nytimes.com/2007/10/18/us/18taxes.html?_r=1&oref=slogin

Mayor Richard M. Daley asked last week for a 15 percent jump in the property tax. Todd H. Stroger, the president of Cook County’s board, called on Wednesday for increases in sales, gasoline and parking taxes. And all that does not even begin to address ways of keeping the financially troubled bus and train systems running.

While Chicago’s case may be extreme, it is by no means unique. Across the country, local governments are feeling a financial strain driven largely by the nation’s real estate downturn. City finance officers predict slowing revenue even as they remain under pressure to keep spending, especially in areas like health care and pensions, according to an annual survey by the National League of Cities.

To handle budget deficits they now expect, many cities are increasing fees for services, and some are considering raising property taxes, said the report, to be released Thursday.

“We know what’s coming here,†said one author, Christopher W. Hoene, director of policy and research for the National League of Cities. “If the housing market continues to flatten out or even decline, we’re in for some tough times for cities.â€

The signs are all around, in flattening property assessments (which mean flattening property tax revenue) as well as rising mortgage foreclosures, which also bode poorly for revenue collections.

In Milwaukee, where a new budget proposal would cut the number of firefighters on some ladder trucks, the value of residential property had been increasing an average of about 13 percent a year since 2001. But those increases slowed sharply during 2006, said Mark P. Nicolini, the city’s budget and management director.

In Palm Beach County, Fla., foreclosures rose to 4,830 in 2006 from 3,049 in 2005. And in just the first eight months of this year, the number hit 7,544, said Sharon R. Bock, the county’s comptroller and clerk. Vacant job positions in Ms. Bock’s office are going unfilled, and “it could get worse,†she said.

In Cleveland, revenue from building permits has fallen about $450,000 short of projections this year. Further, foreclosures have limited the city’s ability to borrow money, because municipalities borrow against the assessed value of their property base, said Sharon A. Dumas, the director of finance. Cleveland had hoped to borrow about $45 million this year for capital projects, Ms. Dumas said, but now the number will most likely be closer to $35 million.

For the moment, she said, the city is finding relief in an unlikely place: baseball. Taxes on tickets for the Cleveland Indians’ postseason games against New York and Boston could bring in more than $1 million.

In interviews, some city and county budget officials said the direct effects of the housing downturn could have a lag time of several years when it comes to local government revenue, whose level depends on property reassessments. Some pointed to factors particular to their cities — a loss of state aid, perhaps, or legislation limiting local property tax collections — as more dire.

“In some respects, this may be a correction,†Mr. Nicolini, of Milwaukee, said of the real estate decline. “If the job market stays relatively strong, it’s less of a concern. But if the trend were to continue, then it gets worrisome.â€

Even in New York, where revenue has soared the last several years, officials have been predicting a slowdown and are preparing for belt-tightening. The anticipated falloff is due in large part to lower expected profits on Wall Street and a projected decline in real estate transactions, rich sources of tax revenue.

“The good times don’t go on forever,†Mayor Michael R. Bloomberg said Tuesday, “and while I don’t think we’re going to have a recession in this city, I think it’s probably true that we will have a slowdown in economic activity, a slowdown in tax revenues.â€

The report from the National League of Cities was based on responses from finance officers in 359 cities, all with populations of 10,000 or more, from April to June. It found that 7 in 10 believed their cities were better able to meet fiscal needs during 2007 than in 2006, but that many were quite pessimistic about the years ahead. In the Midwest, the picture was already grim: almost half reported that their cities were less able to meet their financial needs this year than last.

Some local and state governments built up large surpluses in recent years, which, they hope, will cushion them now. Next month, the United States Conference of Mayors meets in Detroit to look at the real estate downturn and its effects on residents and municipal budgets.

In Chicago, meanwhile, Mayor Daley confirmed Wednesday that he was pondering yet another way to raise money: selling or leasing city parking meters to a private company. Questioned about the notion, Mr. Daley pointed to everything he must pay for.

“How are you going to do ll this?†he said.

Diane Cardwell contributed reporting from New York, and Catrin Einhorn from Chicago.