It’s time to take a look at how the amalgamation numbers shake out. Step One – take a deep breath. Step Two – be patient as you review the numbers. There are two scenarios, each of which are presented with two different sets of assumptions. These are not the final figures but are the easiest to model and understand. There will be additional scenarios presented in the next post that hopefully better model what amalgamation might mean for the individual municipalities. But, let’s start simple and work from there.
Key Assumptions and Descriptors:
- There are two basic scenarios, Scenario 1A with the five core municipalities – Carling, McDougall, McKellar, Parry Sound and Seguin. Scenario 2A has the core five municipalities plus Archipelago. This second scenario is a change in direction from an earlier post where I said I would not include the Archipelago. My decision to include a scenario with Archipelago results from my look at the Muskoka model. In Muskoka there are very urban and very non-urban centres, not unlike West Parry Sound. During the amalgamation process it was obviously felt that Muskoka Lakes was not that different and would benefit from, and contribute to, the district.
- Each of Scenario 1 and 2 are a simple summing of the tax revenues for all of the municipalities divided by the total assessment for the 5 and 6 municipality scenarios. This is a very crude first estimate and sure to raise complaints in a couple of the municipalities. Additional scenarios, 1B and 2B, are presented showing the impact of an overall 10% savings with amalgamation. I suspect that this is too optimistic but is worth sharing.
- The numbers presented include both the dollar and percentage increases and decreases for each scenario. There are enough figures provided to permit the interested person to work out their own numbers or simply check mine.
- The scenarios present the Residential tax rate figures, but the percentages can generally be applied to the Commercial and Industrial tax rates. To simplify the tables, a single $250,000 assessment is used for calculation purchases. For a $500,000 assessment just multiply by 2. For those lucky folks in Seguin, Carling and Archipelago multiply by 5, 10, 20 or 50 as appropriate.
- The scenarios also include Education taxes which have the same rate for all municipalities. Education taxes are a much higher proportion of total taxes in Seguin, Carling and Archipelago than the other municipalities.
This scenario is a simple add and divide exercise. All of the property tax revenues for Carling, McDougall, McKellar, Parry Sound and Seguin were added up and divided by the sum of the assessments for these municipalities. Here are the numbers.
- I can imagine the howls coming from Seguin and they are deafening. On the other hand, the people in Carling are saying – okay, that’s much better than I imagined. In Parry Sound the response is “YES”. The folks in McKellar are voicing complaints, but what’s new?
- This is the crudest of the calculations and does not properly reflect what would be seen with a well thought out amalgamation process. Future scenarios will try and model something more sophisticated that takes account of service levels.
This scenario is the same simple add and divide exercise. All of the property tax revenues for Carling, McDougall, McKellar, Parry Sound and Seguin were added up and the total was reduced by 10% to reflect some sort of amalgamation savings. As was the case for the previous scenario this figure was divided by the sum of the assessments for these municipalities.
- Okay, these numbers are a bit better for Seguin, but doubtless still unacceptable to a municipality that is addicted to low tax rates. McKellar ends up pretty much neutral and there are savings in Carling, McDougall, and Parry Sound.
- Scenario 1B sees that $250,000 property in Seguin paying an additional $342 per year. That’s a 26% increase over the current property tax rate. The same assessed Parry Sound property owner is seeing a $1,900 decrease.
This scenario uses the same approach as 1A and adds up the property tax revenues for Carling, McDougall, McKellar, Parry Sound, and Seguin plus Archipelago which is then divided by the sum of the assessments for these municipalities.
- Now the folks in Archipelago are howling and the Seguin folks are not any happier with only $100 shaved off the scenario without Archipelago. The folks in Carling, McDougall and Parry Sound all have smiles, some bigger than others. The folks in McKellar are sulking.
This scenario is the same as Scenario 2A with a 10% savings in the total amalgamated expenses as discussed earlier.
- The Seguin tax increase under Scenario 2B is $250 for a $250,000 property, about a 0.1% increase on the basis of the property value and 19% more than the pre amalgamation taxes. Archipelago goes up $200 or 15% for the same property. Carling and McDougall see not insignificant decreases and Parry Sound can’t believe their luck. McKellar is seeing a savings for the first time under an amalgamation scenario.
The Fine Print
Did I mention that these are crude estimates and will benefit from some tinkering? One of the obvious areas of tinkering has to do with garbage service. I’ll try to adjust for that in the next set of scenarios. There are also other adjustments that would seem to be reasonable to include. Overall, I’m not sure that these adjustments will make the people in Archipelago and Seguin much happier, but I think there is another way to make the increased cost of amalgamation worth considering for all municipalities. I’ll get to that two posts from now, #6 in this series.
McKellar, I am teasing you for your general demeanor when it comes to cooperation with area municipalities. Much of that attitude was seen in the behaviour of the two previous councils. How can we forget the entertaining coverage of council meetings and ‘Business Cardgate’ by the North Star? I am hopeful that the new council will take a more outward looking approach to regional cooperation. Reputation rests not on what you are now, or what you hope to be. It rests on what you have done. That can be changed for the better.
So why does Parry Sound have such a large property tax burden in proportion to its assessment? There are some reasons worth understanding or considering.
Parry Sound Shot Itself in the Foot
- One of the biggest costs for Parry Sound is associated with the losses arising from the operations of the Bobby Orr Community Centre and the Stockey Centre. Together they account for about $600,000 or 5% of the annual tax bill. The Stockey Centre underwent renovations, roof and siding, last year that amounted to about $1.2 million. The Bobby Orr Community Centre had roof repairs that exceeded $100,000 and an expansion will cost close to $1 million. (I’m plugging in these numbers from memory. Feel free to send me a note with corrections.) Personally, I only get into the Bobby Orr Community Centre once a year for the Mayor’s Levee. I don’t think that I have been inside the Stockey Centre, or on the deck, in two years. But it costs me $250 annually in taxes to support these facilities. The Town would be better off selling both facilities for $1 and taking the savings. What would that do for the local and larger community? I suspect that West Parry Sound would be poorer without these facilities. There wouldn’t be the Festival which appeals to many of the seasonal residents in the surrounding municipalities. Do we need really another Pink Floyd or Eagles ‘note for note’ album performance? People must like it because they keep coming back, again and again. What about the community events hosted at the Stockey Centre? Parry Sound effectively subsidizes people who will be attending the upcoming Gordon Lightfoot concert. It promises to be a remarkable show in an intimate setting and without the added cost and time to travel to a Sudbury, Barrie or Toronto performance? Could locals even get decent tickets to these events in another urban centre? Do events like the visiting bonspiels, the Hockey Canada event or even local minor hockey cover their true costs? Of course not, it’s the right thing to do for the town and the larger community.
- The big box stores were effectively subsidized by Parry Sound. It seemed like a better deal at the time than it was. When push came to shove the town was obliged to take on considerable unbudgeted infrastructure expenses for services that support the much larger West Parry Sound community. And in the last couple of years these big box stores won a court case provincially that reduced their assessments by about a third. The difference in tax revenue directly hit the Parry Sound tax rates. Our neighbours? They just tell us how lucky we are to have them patronizing these stores.
For the Greater Good
Remember that sign as you head south on 400 and head into Simcoe County? “For the Greater Good” It should be Parry Sound’s motto.
- As I have noted earlier Parry Sound hosts many if not all of the local social service facilities. These institutions do not pay any local property taxes yet expect a full suite of services. More importantly, they occupy high value land that could be generating tax revenue to support services.
- Hosting schools is not without local Town of Parry Sound cost. In addition to occupying what is often prime real estate and not paying property taxes, these facilities use town resources and incur town supported expenses. The town is obliged to do extensive review to approve the building permits for these public facilities. The costs are not covered by any fees that might be charged. More importantly, these facilities often require infrastructure upgrades that are the responsibility of the town. The recently built William Beatty School presented the town with many infrastructure costs that were not budgeted or covered by the school board. And the conversion of the old school to affordable housing and a community hub has come with surprises in addition to the taxpayer infrastructure costs that came with the conversion. Now the organization behind the property renovation is petitioning to be exempted from property taxes. Their logic follows the thread that the property was not previously taxed as a school so it shouldn’t be now. With that type of logic I would be against any further efforts to provide public low income housing in Parry Sound. Low income housing like many other social issues is not a Parry Sound issue, it is a district issue, but as usual Parry Sound bears the brunt of the administration and infrastructure costs. And it trickles down to the taxpayer.
- Parry Sound is also home to the District Court House. That honour comes with a $50,000 or so annual bill for OPP protection. This is a district resource but a Parry Sound cost.
- Parry Sound also provides management oversight at the staff and council levels for district wide services such as EMS.
- And then there is the West Parry Sound District Hospital. They don’t pay property taxes yet require town resources. I would imagine that Parry Sound provided considerable infrastructure support at no cost to the hospital when it was built. Another rub for me at least is that most of the high-end folks working at the hospital, let’s say more than 90%, do not live and pay taxes in Parry Sound but rather support the tax base of the neighbouring municipalities. I don’t blame them. Why pay higher taxes and have to deal with the noise and the stink of a railway close by?
Four ideas that come to mind that can help address the imbalance of support for services that impact the whole West Parry Sound community.
- Go forward with amalgamation. It not only seems a reasonable way to address current imbalances, but it provides the basis to make the whole district better by providing for a shared vision of a larger community.
- Tack on a 1% salary levy to folks who work in Parry Sound that would be remitted to Parry Sound. If you pay property taxes in Parry Sound that amount would be deducted from your property taxes. If you live in one of the area municipalities you would not have the deduction, unless your municipality wanted to subsidize it. That’s the situation I faced when I lived in one township and worked in another in Pennsylvania. The tax was used by the township I worked in to pay for the required infrastructure to support the businesses. The 1% tax was deducted at source.
- Add 1% to the local sales tax for purchases in Parry Sound. This would be a relatively minor cost and would be remitted to Parry Sound. Heck, just 1% of the purchases at the LCBO and the Beer Store would probably go a long way to helping cover the many infrastructure costs assumed by Parry Sound.
- Add 1% to the bill for local services. That might range from tax preparation to massages to dental services. Would people start driving to Bracebridge to save 1% for a massage or an eye check up?
It’s always fun to ride for free or at a discount. But someone has to pay the bill. Right now that’s Parry Sound residents and businesses. If the community at large is to prosper we need to have everyone paying their fair share.
In the next post I look at the impact of adjusting the numbers presented earlier to account for differing service levels.