10/8/14

Clarifying Municipal Taxes


CartoonSome candidates seem confused about municipal taxes this election. I thought I’d clear up a few facts about property taxes for your (and their) benefit.

Property taxes are made up of three components: the municipal portion (roughly 60%), the county portion (24%) and the education portion (16%). The rate (also called the mill rate) for each portion is set independently by its own body (the province sets the education levy).

The total rate is called the blended rate. The town’s portion is the town-own rate. Usually the blended rate is used because that reflects best what homeowners see. The rate depends on the type of property you own: residential, commercial, industrial all have different rates. Single-family and multi-residential are also different.

Let’s look at how taxes were calculated in 2014 for a single-family house valued at $200,000:

Total taxes payable will be $2,526.31, broken down as follows:

  • Education levy $406.00
  • County levy $608.00
  • Town levy $1,512.32

The value of your home – of every home in Ontario – is set by MPAC, the Municipal Property Assessment Corp. This is an independent provincial agency headquartered in Pickering. It sets the value of your home through a computer model that looks at the value of properties around you and at real estate sales in your neighbourhood.

This model means your home value can increase whether you do anything to it or not.

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10/7/14

Their Shoddy Potemkin Villages


Dirty PoliticsIn 1787, the Empress Catherine II took a long trip to the Crimea along the Dnieper River. She wanted to see how her subjects lived. Not wanting her to see the actual poverty and hardships of the peasants, her lover – and the region’s governor – Grigory Potemkin, had pretty, fake villages of canvas and clapboard built along the way, with his own people acting and dancing the roles of happy peasants. After she visited one, the village was disassembled and rushed down river by barge to be rebuilt further away.

These have become known as Potemkin villages. According to Wikipedia, the term is used today,

…in politics and economics, to describe any construction (literal or figurative) built solely to deceive others into thinking that some situation is better than it really is.

But there’s also the opposite: when it refers to an imaginary construct that is negative: when such constructs are used to divert attention from an embarrassing situation or condition. Or, in some cases, an inconvenient truth.

Politicians have been accused of creating Potemkin villages to embellish situations and put a Pollyanna face on social or political ills. But their opponents – especially during election campaigns – also create their own facades to make the reality look worse. They create shabby Potemkin villages; cardboard slums, ugly-looking facades simply to make themselves look good by making the incumbents look bad.

Collingwood’s municipal election has its own shoddy Potemkin villages. Opponents have created a shabby, fake facade on the economic situation, on the recreational facilities, on economic development and on this council’s many achievements. They would have their followers believe that little if any good has been accomplished this term. They’ve erected not a few of these faux derelicts on social media.

As the Vermont Political Observer blog notes

See,that’s the problem with Facebook: it only takes one person to erect a plausible a Potemkin village.

Here are some of the campaign’s rickety Potemkin villages we’ve all heard during Collingwood’s municipal election, and the more solid truths they attempt to hide:

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10/3/14

Promising to do What’s Already Done


AccomplishmentIt’s good for councillors to know we’ve already accomplished so much that everyone wants to emulate us. Listening to the all-candidates’ speeches and reading the campaign literature is a real boost to the ego.

A lot of new people are promising to do what’s already been done. Incumbents can comfortably sit back and say, “been there, done that, accomplished that already.” We don’t seem to have left a lot for the newcomers to accomplish.

It’s been a very productive term – remarkably so given that we have so few meetings that last more than two hours. (For a list of just a few things we accomplished this term, see my ACM speech.) But still, some candidates seem to want to repeat our successes.

Take for example the promise to “diligently manage our finances and assets…” Check. Already done. We have an asset management plan in place and we started the long-term financial management strategic plan. But we’ve made our finances sustainable this term, so we don’t have to fret so much about them in future. Our practice of replenishing reserves through internal loans rather than just spending them is one example. (Read more about that practice here)

Same with the promise to “Stop the waste by developing a long-range financial plan and transparently evaluating all capital investments.” Aside from the mystery of how one evaluates “transparently” (does that mean invisibly?), we have an asset management plan in place and the strategic financial plan is in the works.

Staff do any evaluation, by the way – councillors only read and comment on their efforts. And any such evaluations would always be public.

As for waste – this council has trimmed the budget and cut spending for the past four years. We’re kept tax increases down to a blended average of only 0.45% per year – less than the cost of living. We saved taxpayers more than $400,000 a year by stopping the rail service (while keeping the line active for future transportation opportunities). And we topped up reserves from $19 to $30 million! No waste here!

Ditto for creating a “plan that looks at our long term financial health.” Initiated by this council, thank you, and will, I expect, be completed before this term is over. We made financial stability a priority at our first strategic planning session in 2011, reinforced that priority at our second strategic planning session in 2013, and we achieved it.

“Manage our high debt load…” Thanks for the advice, but we have paid down $7.5 million of the $45 million debt we inherited this term without raising taxes. We controlled spending and instituted a sustainable plan to finance projects from reserves through internal loans. And we topped up reserves, too. So cross that one off, too because we’re one step ahead of you.

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10/3/14

My Speech at the All-Candidates’ Meeting


Here’s the two-minute speech I gave Wednesday night at the Collingwood Legion, plus the wrap-up:

In two minutes, I can’t list everything this council and staff have accomplished on your behalf. But here are some highlights:

  • We answered your demand for more ice and water time. Parents no longer have to drive their kids to other towns for meets because we built two beautiful new recreation facilities right here.
  • And we paid for them without going into debt or raising your taxes.
  • In fact, we also paid down the debt by almost $7.5 million while adding $11 million to town reserves this term.
  • We completed an asset management plan.
  • We initiated a long-term financial management plan.
  • We put much-needed new docks in the harbour.
  • We’re upgrading the Eddie Bush arena.
  • We launched very successful bus services to Wasaga Beach and Blue Mountain.
  • We finished First Street and started the reconstruction of Hume Street.
  • We built a new fire hall and renovated the police station.
  • Yet we kept our average tax increase to under one-half a percent per year. That’s less than the cost of living.
  • We launched a small business centre with our community partners to develop and grow local business more efficiently.
  • We hired a marketing and economic development director to promote our town, to attract more industry, more visitors and, most important, more jobs.
  • We even appointed an integrity commissioner to make sure we behave in the most transparent and accountable manner.
  • Our operational and governance reviews are making the town more efficient and your council more effective.

And that’s not all. We’ve accomplished a lot this term. And we can do more next term, including:

We must continue to keep your taxes low. That’s number one.

We need more jobs, more industries, more business. We’re already working on that.

Our harbour has been neglected too long. It must be redeveloped. Together, we can make it the best harbour on Georgian Bay. Our waterfront master plan will guide us.

If you want decisive leadership with vision, and if you want continued financial stability next term, please vote for me, Ian Chadwick.

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10/2/14

A Buddhist Guide for Voters


Kalama Sutra
While it was intended as a general ‘charter of free inquiry,’ the Buddhist Kalama Sutra (or sutta) contains wise words that all voters – especially local voters – should heed during the municipal election campaign.

The Kalamas were a people in ancient India. Gotama visited them and stopped in a town called Kesaputta, where he gave a sermon, now referred to as the Kalama Sutra. At first the citizens came to him with a deep problem: how to trust what people were telling them. They had been visited by many religious teachers who all held divergent views. Not unlike candidates for Collingwood council going door to door. Well, without the spirituality and a few badmouthing other candidates, too. But let’s not get distracted by them.

Here’s how Soma Thera translates what the villagers said:*

There are some monks and brahmans… who visit Kesaputta. They expound and explain only their own doctrines; the doctrines of others they despise, revile, and pull to pieces… Venerable sir, there is doubt, there is uncertainty in us concerning them. Which of these reverend monks and brahmans spoke the truth and which falsehood?”

That’s a lot like trying to decide which candidate is the best one(s) to vote for. Some explain what they stand for while others merely revile what others stand for. Some offer hope and a future, others tear it down. Some simply tell lies. Doubt and uncertainty arise. When they come to your door or make statements in an all-candidates’ meeting, how do you trust what they say?

That’s when the Buddha made one of his most memorable speeches, in which he told the listeners they had to decide the truth for themselves, to examine the claims and prove what is right or wrong for themselves, and not make choices based on hearsay, ideology or gossip:

It is proper for you, Kalamas, to doubt, to be uncertain; uncertainty has arisen in you about what is doubtful. Come, Kalamas.

  • Do not go upon what has been acquired by repeated hearing;
  • nor upon tradition;
  • nor upon rumor;
  • nor upon what is in a scripture;
  • nor upon surmise;
  • nor upon an axiom;
  • nor upon specious reasoning;
  • nor upon a bias towards a notion that has been pondered over; nor upon another’s seeming ability;
  • nor upon the consideration, ‘The monk is our teacher.’

One might add some modern terms to that list of things that do not offer a suitable basis on which to form an opinion of what is or is not truthful:

  • nor by blogs;
  • nor by speeches;
  • nor by campaign literature;
  • nor by self-written pieces in the local newspaper;
  • nor by innuendo;
  • nor by unproven or unfounded allegation;
  • nor by rumour;
  • nor by email blasts;
  • nor by claims made when stumping;

He then tells the citizens that to learn for themselves what is bad, what is bad, evil and harmful, they must assess everything by asking, “Does this do good? Or harm? Does it lead to suffering?”

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10/2/14

Misconceptions About the Town Debt


Clock TowerYesterday members of council received a letter from our auditors that should clear up any misconceptions floating around about debt and debentures. It is clear and succinct.

I was also forwarded an email from a candidate (sent to his supporters) with misleading statements about how much debt there is. I don’t know if it was deliberately meant to be misleading – I suspect rather that the candidate simply doesn’t understand municipal finance. But it isn’t really a complicated process.

And no candidate should make claims based on misunderstanding or misinformation. It is their responsibility to get and present the facts, not fantasies, nor opinions.

In response to concerns over such inaccurate claims and misunderstandings, we asked for a clarification. Sue Bragg, B.B.A., CPA, CA, and partner in Gaviller and Company, which audits the town’s financial statements every year, wrote the following (emphasis added):

We understand there have been some inquiries regarding the “definition of debt” and how the debt levels have changed during this last term of Council.
Our professional opinion is that debt is external, contractual debt, typically in the form of bank loans, debentures and mortgages. This definition is in keeping with the presentation of debt on the Financial Information Return prepared annually for the Ministry, as well as the Ministry’s calculation of the Annual Repayment Limit.

Okay, here’s the first important point: debt is external. That’s both the professional and the legal definition of municipal debt as defined by the Ministry of Finance.

Debt is what we owe outsiders: money borrowed with interest and bank charges to be paid. It’s what affects your taxes. It’s our debentures.

It is not any internal loans we have. I’ll get to those a bit later and explain how they work. Just keep in mind that they are not debt by any professional or Ministry calculation.

So then what is our actual debt? Ms. Bragg continues (emphasis added):

As per the 2010 audited financial statements: long-term debt was $45,507,356 and there was a bank demand loan in the amount of $664,013 for a total of $46,171,369. As per the 2013 audited financial statements: long-term debt was $36,860,776 and there was no bank demand loan debt.

We are unable to comment on the 2014 balances as we have not audited those transactions to date.

Got that? We started with a total debt of $46.17 million ($45.5 million in debentures) when we took office. As of Jan. 1, 2013, this council and staff had brought it down to $36.86 million. By the end of 2014, we estimate it will be roughly $38 million because we will pay down more this year, but we also need to borrow for two earlier projects).

At the end of our term, this council will have paid down approximately $7.5 million of our debt, as we have been saying for months now. These are the facts verified by the auditor.

Our debt is not the $50,361,230.00 some candidates are suggesting.

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