It’s time for an uncomfortable discussion at Whitehorse City Council. Our representatives need to say no to more tax increases.
The budget city council is voting on includes a four per cent tax hike this year. I don’t see any commitments to tax freezes after that, so I am guessing we will be having the same conversation a year from now.
It is easiest for politicians to agree with this kind of proposal from officials. It is “only” $65 for the average home owner. Only two per cent higher than inflation last year. Residents of towns like Regina and Leduc pay even more. Officials have put together a lengthy PowerPoint presentation that makes the case for tax increases.
It can be difficult to be the city councillor who asks the uncomfortable questions.
But we need to have that conversation. If taxes grow a few per cent faster than inflation every year, it builds up. And even keeping tax increases to inflation disadvantages all those who don’t have iron-clad government jobs with automatic raises.
My property taxes rose from $1,544 in 2002 to $2,272 in 2012. That’s a 47 per cent increase, or a 21 per cent increase after inflation (assuming two per cent inflation per year over the last decade). The parking, dump and other fees I pay also have gone up substantially. Now another four per cent will be thrown on top, plus who knows how much next year.
One question is why we aren’t capturing the benefits of growth? With a higher population and more taxpayers than a decade ago, we should be sharing the fixed costs of city hall among more people. More roads may need ploughing, but finance, human resources and other overhead costs should grow more slowly than population.
So let me make the case against a municipal tax hike this year. These are arguments which are noticeably absent from the pro-tax increase document put out by the city: “Operations Budget 2013 - Managing our City’s Growth Responsibly.”
First of all, we are a remote economy with high costs. Our families and businesses have to pay more for heating, shipping and lots of other things. With our power rates, fuel and heating costs also rising, every dollar the City of Whitehorse takes from family budgets or business bottom lines makes it more difficult to achieve the economic growth we need.
This is a “lobster in a pot” phenomenon, where a gradual rise is hard to notice but the ultimate result is not good for the lobster. The years add up to a significant burden.
For example, when a grocery store has to pay over $200,000 in property taxes, as one of ours does, that just means its customers have to pay higher mark-ups on their food. The same for every other business in Whitehorse.
The city has economic development staff working to grow our economy, then undermines them with its own tax policy.
Secondly, we have a fiscal imbalance in the Yukon. First Nations and municipalities deliver lots of different programs to citizens. They are cash strapped. Meanwhile, the Yukon government has received a bonanza of transfer payments in the last decade.
Core transfers from Canada to the Yukon went from $520 million in 2004-5 to $809 million this year, and that doesn’t even count various recoveries and special programs. This is an increase of almost $300 million per year, which totally dwarfs the city budget of $65 million. Only a small share of this federal cash would eliminate the need for tax rises in Whitehorse. City council should scream louder about this, and should pester territorial politicians about it every time they meet one.
Besides inflation and raises for city employees, the city’s third big justification for tax hikes is “reorganization.” The city staff were reorganized last year. Usually one expects reorganizations to deliver more efficiency and effectiveness. This one seems to be adding cost, but where are the effectiveness improvements?
There are a few prominent efficiency measures included in the budget, like scaling back snow removal in unoccupied parts of Whistle Bend and closing the Canada Games Centre for four more holidays (by the way, aren’t holidays when a recreation centre is most needed?).
City councillors should ask for ideas and options that would get the city to a zero-tax-increase budget, and they should make these public so we can discuss the pros and cons. What about a holiday on new vehicle purchases for a year, for example? I’m sure city staff have lots of ideas.
If city councillors aren’t seen to be fighting harder for citizens on tax increases, the next election might be a lot harder for them. And easier for Mike Harris-style candidates who really want to wield the axe.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels.