Transcript of Introductory Remarks by Ian Angus
At the October 28, 2013 Port Hopers for Fair Taxes Information Session
At the Lions Centre, Port Hope Ontario
Welcome everyone and thank you for coming out tonight to hear us.
We thank the Councillors in attendance tonight:
Mary Lou Ellis
And would like them to know we appreciate the effort they are making to understand our point of view.
For those of you who don’t know who we are, I am Ian Angus, a 25 year resident of Ward 2 and for some years Reeve of the Township of Hope.
With me are Christine Collie Rowland, who has spent most of her life in this community and who is the person who first noticed the efforts by our council to take money from Ward 2 for no apparent reason.
Bill Bickle, whose family has been in Hope Township for generations is, along with Rick Norman and myself, a member of the Area Rating Working Group, and has been invaluable in his contribution to what has brought us here tonight.
And Rick Norman, who knows more about our tax levy and area rating than anyone I know of, bar none. Whether it be his incredible ability to ferret out data, or his spread sheets that can model our taxation process as well as or better than municipal staff, his knowledge and hard work has given us the depth of understanding we now have on what is happening to us.
There are 4 things we wish to achieve.
1. to explain what we propose as a fair and equitable method of allocating municipal costs.
2. to persuade Council to accept our proposal – Option 7 – as an alternative to their 6 options.
3. to obtain acceptance of the fact that where service levels are different, costs can be area rated.
4. to persuade Council to adopt Option 7 as the fair and principled solution to the present impasse.
Tonight we will start with a brief history, explain why the so-called legal opinions are so misleading, and then set out the rationale behind our Option 7.
We plan to keep our presentation to less than 30 minutes, because after this we want to hear from you, and to provide further detail and backup for what we are saying in our answers.
When asking your questions, please feel free to direct them to any one of us. We have worked on this together and we all have a good grasp of the facts.
Copies of the slides we are using will be put up on our web side in the next few days.
And so, now a little history.
Amalgamation, as you know, took place at the end of 2000. It was not so much of an amalgamation, however, as a merger for administration purposes of two distinctly different communities.
– Ward 2 Councillors have double votes on certain matters
– Financial reserves were required to be kept separated
– Ward 2 would continue to use OPP, not Port Hope Police
– The new council adopted a policy that there be no shift of tax burden between the Wards. (this policy appears, by the way in virtually every tax rating bylaw since amalgamation with the notable exception of 2013).
If one combined the tax levies of the two communities since 1992, they were consistently 85% Port Hope and 15% Hope Township.
In 2003 Council adopted the policy of area rating that formalized this experience and set out an adjustment formula.
Three years later, when it became clear the adjusting formula wasn’t working as intended, the formula was amended to prevent the Ward 2 share from falling below 14.2% of the whole.
In early 2012 the notion arose that Ward 2 taxes should be made the same as Ward 1 taxes. This resulted in the formation of the Area Rating Working Group – a committee composed of three Councilors without a vote and five citizen members with a vote to review the amalgamation formula and recommend amendments and improvements that would produce a fair and equitable system of area rating for future years.
Three of the five citizen members of that committee are before you tonight.
The work of the committee was ponderous and problematic.
We had great difficulty obtaining reliable financial information – for instance staff could not tell us what any department spent to provide services to the respective Wards. They also provided us with multiple versions of the same financial data. Particular examples include;
– 4 versions of how the LLRW trust interest was used, the last of which shows over a $1 million variance with statements obtained from the trust fund manager.
– Payments in Lieu data (the monies paid by government in lieu of realty taxes) which varied from approximately $750,000 per year to being “trivial”.
– Wildly inaccurate figures for average household assessment (staff claimed for over 8 months that the average Ward 2 house was assessed at less than Ward 1, before having to admit the average in Ward 2 was 46% higher).
Because of the inadequacy of or complete lack of financial data, the committee was forced to lump many of the cost centres into a common pot, instead of separating them according to the different levels of service .
To quote from a report to our June 24th, 2013 meeting.
“In our past committee meetings, all discussion of what costs are common took place with the members understanding that a later agenda topic would cover the issue of dividing the common costs by Ward”.
The other problem we encountered was the sudden appearance of what I will call “bought in” legal opinions. The first of these appeared in January 2013 and claimed, contrary to all the documentation on the subject, that the Ward 2 LLRW Trust fund was not a trust at all and could be spent (contrary to the terms governing amalgamation) in Ward 1.
We are not finished with this issue and will give you more detail later.
As we were working without reliable financial data from staff, we had to reach out and find other ways of determining what sort of area rating would fairly represent what the actual costs or tax burden ought to be.
We achieved this through several different approaches.
First we looked for service levels that had improved.
If service levels had increased, then Ward 2’s share of taxes should rise.
However, we found none.
In fact, the only evidence we could dig up showed that some service levels were actually decreasing.
So there was no reason here to say Ward 2 was not paying its fair share.
So we looked at other municipalities and found that the rural Northumberland tax levels were 62% of the urban ones.
Using that as a measure, the split should be 83 – 17%.
We took into account the higher household assessments in Ward 2, which when adjusted to match Ward 1, showed the split should be 83 – 17%.
If we equalized the overall average tax bills (Ward 2 households pay higher education and county tax by virtue of being assessed higher) the split would be 84.5 – 15.5%.
Policing costs have also been surprisingly consistent – virtually unchanged over the years at 84.5 – 15.5%.
Every indicator we could find pointed to the same thing – the allocation of taxes between Ward 1 and Ward 2 was pretty much on the mark.
With this in mind, when Council asked that we recommend how to set taxes for 2013, the Committee voted 3 – 2 on splitting the common costs 82.5% Ward 1 and 17.5% Ward 2.
We believed this was fair and equitable and if anything would result in more benefit to Ward 1 than Ward 2.
Then in mid June this year, out of the blue, came the second legal opinion. It claimed the rules set out by the Ministry of Municipal Affairs effectively eliminates the possibility of area rating any common costs, although this is exactly what the municipality has been doing for over a decade without any complaints or questions from the Ministry!
The legal opinion went on to claim that all common costs must henceforth be single rated (everyone pays by weighted assessment) and further that Ministry rules would not permit the phasing in of any resulting tax increases.
This was devastating. If true, it meant all our work has been for nothing.
Fortunately, this latest legal opinion was as ill conceived as it was poorly researched.
When we contacted the Ministry, they directed us to the City of Hamilton where, guess what, they use area rating based on what services are received by different parts of their expanded Municipality.
And they use phasing to soften any resulting tax increases!
To quote from their staff report “Legislatively, all services, except for Public Health, can be area rated”.
So we have developed an area rating formula using the City of Hamilton approach.
Port Hope staff cannot hide behind the inadequacy of their accounting system, they will have to learn to allocate service costs just like any other business or municipality (ie Hamilton).
Our Formula is fair, equitable and fully complaint with legislation.
– It reflects the costs services received
– It respects significant differences in service levels
– It acknowledges that all major services should be considered.
And now it will be explained in detail by Bill and Rick.