Municipal money is in ever shorter supply


The Association of Municipalities of Ontario (AMO) had their annual conference in Ottawa last week and Niagara seems to have been well represented. Our Mayor was there and so was Regional Councillor Paul Grenier. He’s a member of the board of this organization. Councillor Grenier stated that, “If a new source of revenue is not found, cities and towns won’t be able to repair roads and sewers.”

This statement was in response to Premier Wynn’s rejection of the AMO request for a 1% increase in the HST, to be used by municipalities to help pay for much needed upgrades in infrastructure.

The AMO claimed that this 1% tax increase would raise $2.5 billion and, without the money, property taxes could double in the next decade. Niagara’s cut would total $25 million if this 1% was added to the HST. This $25 million would be shared among 13 separate municipal governments.

The Region’s and 12 municipalities’ budgets alone are in the 100s of millions of dollars. I don’t think it would make a bit of difference to them, but it sure would to all of us. Everything we buy would cost extra: 14%, up from 13%. Over the course of a year, that adds up.

Meanwhile the CAOs of 26 communities were polled and came to similar conclusions. Said one CAO, “Something has to give,” referring to the gap in revenue and the need to replace aging infrastructure. They are seeing a gap in what taxpayers want and what they are willing to pay in increased taxes.

Sounds like there is a money problem. But, when you think of it, by the time a municipal government hires all its new employees, increases their pay above the inflation rate, increases their benefits, placing more and more staff on the Sunshine List, pays out generous severance packages to the terminated, hires any number of consultants, pays for conferences here, there, and everywhere —including Ottawa and Seattle—pays lawyers to check harassment charges flying around, pays for poor workmanship on relatively new structures like arenas and pools, builds new structures like arenas and arts centres and bridges (mustn’t forget about bridges) at a loss, then I suppose it would be accurate to say that there is a money problem for things like roads and sewers.

Collecting an extra 1% isn’t going to happen. There is an election or two next year.

I suggest that the Regional Councillor and the CAOs go back to the drawing board and look for some new and cutting-edge solutions. Some real moving-forward, reaching-out, team-approach ideas such as, say, cutting the size of municipal government. That could save $25 million and then some in no time and we wouldn’t even notice the staff loss.

A Pelham
resident wrote a letter to the Mayor indicating her thoughts on the plight of the Haist Street arena. She does not want the land to be sold to developers, nor do many others wish to see this parkland paved over. She suggested that any decision be deferred until after the next municipal election in 2018. A reasonable request, as I couldn’t find evidence that any politician suggested during the last election that this land be sold. The people of Pelham did not vote for any such sale.

The Mayor responded with a link to the online survey being conducted by the Town and some interesting numbers. He had heard rumours that the existing arena cost $700,000. Another source suggested that the arena required only $100,000 in borrowing. Other sources told me that the townsfolk, back in 1975, raised a large amount in fundraising to offset the cost to the taxpayer. Some or all of these numbers may be true, but I must work with what is available, just as we all work with what the Town asserts is the cost of the new arenas.

The following numbers were found by using the Inflation Calculator from the Bank of Canada website. I thought I would try it out.

Back in 1975 I had a job that paid $2.50 an hour, minimum wage. Sounds pitiful today, but when adjusted for inflation it works out to $11.32, just shy of the minimum wage in today’s money. My, how times don’t change when it comes to paying people for menial work. The Mayor forwarded an ancient document outlining the costs of the current arena in 1975, 42 years ago, and these numbers were an eye- opener. The arena came in at an estimated $525,000, or $2,377,083 in 2017 dollars. Wintario provided a grant of $131,000, or $593,138 in 2017 dollars. This was 25% of the overall cost.

We townsfolk were hit with a tax increase of $11.80, or $53.43 in 2017 dollars. This was based on the original debenture of $375,000, or $1,675,000 in 2017 dollars, with a payment term of 15 years.

The Mayor says that the portion we will pay for the new Community Centre’s twin arenas is less, when adjusted for inflation. He says we’ll pay $46.70 per household on average, which would have been $10.31 in 1975 dollars.

Yet some quick math suggests otherwise. The townsfolk of 1975 paid a total of $801 to cover the debt, and today we are on the hook for $1,400 per household to pay for our new arenas—both numbers in 2017 dollars. There was a rumour that the original debenture was much less than that because of local fundraising, but again, I can only deal with the numbers at hand.

Plugging in more numbers was even more interesting.

The new $36 million arenas being built now would be the equivalent to the Town building an $8 million arena in 1975, not the $525,000 arena that was actually built.

Remember, the Town has received no money in the form of grants for the new arenas. Wouldn’t it have been nice to have received 25% of the cost of the new arenas from grants? That would’ve been $9 million, and that $9 million would have lowered our debt from $36 to $27 million. Selling “surplus” land and collecting development fees, according to the Mayor’s figures, would have subtracted $24 million from that remaining $27 million, leaving $3 million to go. The Town has promised to raise $3 million through fundraising, which would have seen our new arenas entirely paid for. Then we would not have to pay an average of $46.70 per year for 30 years, a number that has some doubters in any case. Wouldn’t that have been a win-win for everyone?

But today, faced with paying for the new arenas, the Town is marketing every piece of land we own, looking to sell to anyone who is interested. Mind you, the way the real estate market seems to be going in the Region, the Town better get a move on. That land could be losing value every month it sits unsold.

The above numbers for debt repayment are based on the average house value and do not take into account fluctuations caused by overall tax increases. The repayment per household is a percentage of the tax bill, not a set yearly amount. I would like to thank the staff at Town Hall for digging up the original 1975 bylaw.

About the Author

The Voice of Pelham
Pelham's independent news source from the heart of Niagara.