Oops! There were simple arithmetic errors in the original version. The imputed St. Peter’s tax figure should have been be $16,600 not $166,000. For the United Church in Nobel the figure should have been $1,255, not $12,555. I have removed the original post and replaced it with this one. The revised section is identified in bold and italics. I apologize for the confusion.
MI have noted that in the past year more and more folks from the area municipalities are suggesting the possibility of amalgamation as a positive way to provide for necessary and enhanced services. This is despite their realization that it will cost them more in taxes. While the suggestion is gaining momentum locally it really doesn’t matter, amalgamation won’t happen unless the Province forces it with either a stick or a carrot. I spent quite a bit of time analyzing the consequences of amalgamation that were captured in a series of posts. Here are links to these articles if you are interested in diving in a little deeper.
West Parry Sound Amalgamation – Part 1 (The Numbers)
West Parry Sound Amalgamation – Part 2 (Analysis)
West Parry Sound Amalgamation – Part 3 (Muskoka Model)
West Parry Sound Amalgamation – Part 4 (Crude Models)
In the meantime, there is a problem with the current situation that extends beyond the high tax rates in the Town of Parry Sound (TOPS). It is a matter of services for organizations that are exempt from taxation. This includes most notably houses of worship and social services. This was highlighted by deputations last week when the Bayside Family Church asked the Town for considerations related to a grinder pump and the Parry Sound Friendship Centre requested support with a Warming Centre. They are in a difficult situation. They pay no taxes to support the necessary services the Town provides, but they hope for improved services. What is their argument? It probably relies on the Town doing the generous thing and helping out these not-for-profit organizations that make a difference in the larger area community.
For some time now I have written about the inequity of asking Town of Parry Sound taxpayers to indirectly subsidize the services provided by these many non-for-profit organizations with higher taxes. Not only do these organizations require Town services they also occupy valuable real estate that is not available for business or residential uses that would not consume any additional services but would pay property taxes to support these services. I have received consistent pushback on this point from at least one reader but have received general acknowledgement on the merit of the point from most. This acknowledgement is generally accompanied with a shrug of ‘what can you do about it’.
Perhaps there is a way the situation can be fairly handled, and it doesn’t require the financial shock for the low tax municipalities that would be associated with amalgamation.
- The various not-for-profit organizations serve the much larger area community. Perhaps the largest population served by these organizations resides in TOPS, but certainly many live in the surrounding municipalities.
- The current not-for-profit organizations in the Town account for more than $20 million in assessment value according to MPAC figures. This does not include schools, the West Parry Sound Health Centre, or public housing. In total then the Town foregoes about $250,000 in revenue annually if taxed at the residential rate and more like $400,000 at commercial rates. Add in schools, hospital and public housing and it would be more than $1 million per year.
- TOPS has experienced significant cutbacks in support from the Province that has caused the Town tax rates to increase significantly.
- The Province and Canada also occupy high value property that is not subject to property taxes. However, both the Province and Canada provide funding in lieu of property taxes. It may not be full compensation, but it is a reasonable level of funding all things considered.
- There is some acknowledgement that the not-for-profit services provided in the Town of Parry Sound serves the larger area. Both DSAAB and Belvedere Retirement Home receive funding from the municipalities in proportion to their assessment base. Just because it is in the Town doesn’t mean it only serves the Town. As an aside, I believe that neither of these not-for-profit organizations pays property taxes.
- Not-for-profit organizations, excluding schools and the hospital, determine where their members or clients reside. In the case of religious organizations that would be their members. In the case of social service providers, it would be their clients.
- The various organizations then estimate what proportion or percentage of their services are provided to people residing in each of the municipalities.
- This type of service audit would be supervised by each of the municipalities for all qualifying not-for-profit organizations in their municipality. While it is likely that people from Seguin and Carling attend church in the Town of Parry Sound, it is also possible that people from the Town of Parry Sound or McDougall attend church in Seguin or Carling. It would be the same process for social services although most services are provided out of the Town of Parry Sound because only the Town provides the necessary infrastructure to support these organizations.
- A calculation is made of a ‘fair’ tax rate to be charged on the MPAC assessed value of the not-for-profit organizations’ land and buildings. A ‘fair’ tax rate might be the residential rate.
- The credits and debits are toted up for each municipality, netted out, with each municipality paying their bill annually.
- Peter’s Catholic Church has an assessed value of $1.23 million. At the Town of Parry Sound residential tax rate of $1.35 per $1,000 of assessment, its annual property taxes would be $16,600 if it were subject to taxation. If 55% of the parishioners live in the Town of Parry Sound, 15% in Seguin, 10% in McDougall, 10% in Carling, and 10% in McKellar, then the municipalities would be assume costs of $9,130, $2,500, $1,660, $1,660, and $$1,660 respectively.
- If we then take the United Church in Nobel with an assessed value of $215,000 and a tax rate of $0.57 per $1,000 ($1,255 total) and reverse the apportionment for the Town of Parry Sound (10%) and McDougall (55%) and the rest are the same we arrive at costs of $122, $184, $670, $122, and $122 for each municipality.
Tote up the numbers for all of the not-for-profits and offset the costs and revenues for each municipality and you have the amount to be remitted to each municipality. (Note: I have not forgotten about The Archipelago and Whitestone, I have just ignored then to make it a bit simpler.)
The net/net is pretty obvious. The Town of Parry Sound basically subsidizes the services of the other municipalities. The impact on each for the municipalities would be relatively small, certainly much less than amalgamation would imply. If we estimate that the Town of Parry Sound foregoes as much as $500,000 per year in tax revenues related to the not-for-profit organizations it hosts, and it actually ‘consumes’ 50% of the services, then the other municipalities would be on the hook for $250,000 after adjustments. The municipalities, excepting TOPS, in total collect taxes of about $40 million from residents and businesses annually. Adding in another $250,000 would raise their taxes by about 0.6%, that is less than 1%. The Town of Parry Sound rates could go down by 3%, or the rates could stay the same and additional services could be provided.
This type of sharing of the service burden for not-for-profits might make it much easier for TOPS to be a little more sympathetic and supportive when not-for-profits request a little bit of help related to standard services. It would be a ‘shared’ help.
The Arguments Against
- It would take some toting up and accounting to start the process and require each municipality and not-for-profit to do the work. (It wouldn’t really be that hard though. All of these institutions have lists of members and clients and they typically don’t change all that much year-to-year.)
- It doesn’t acknowledge the burden that the Town of Parry Sound bears with respect to the hospital and the schools. (Okay, but something is better than nothing.)
- The Town of Parry Sound benefits from all of the traffic so it is compensated indirectly with merchant related property taxes. (Yes, but these merchants also benefit the area residents by providing local services. I’m not sure the Town has ever recaptured the investments made in infrastructure for the south end centre. And recently the Town lost about $200,000 annually in property tax revenues when MPAC reduced the assessments for these big box stores.)
- We have been doing this for decades and it works, why change? (This the argument favoured by segregationists. Yeah – it worked pretty well for them while it lasted.)
- If you think this hits your property taxes, amalgamation will make you scream if you are in one of the low tax rate municipalities. I’m looking at you Seguin and the Archipelago.
- Consider the 1% solution. (More on this is a future post.)
- Do nothing and hope that the Town of Parry Sound continues to be generous and raises taxes without cutting services.
I have been following the Town of Parry Sound budgeting process for about eight years now. I really can’t find anything in the budget that screams unreasonable or an indulgence at the expense of taxpayers. (Except perhaps for the downtown flower baskets that consistently suck. And there is of course the decision to provide free parking. How is that working out Parry Sound? People still bitch don’t they?)
The Town faces continuous pressure to provide better service for tourists, not-for-profits, schools, and area visitors that directly impact our taxes. (Why can’t we look like Huntsville, or Gravenhurst or Port Carling?) A simple sharing of the load related to not-for-profits could go a long way to making things better for everyone.