Tuesday’s headlines

13 comments

1. You should add Mayor Millers latest award to the news list.

   http://www.madriverinstitute.ca/

   The Worst Municipal Councillor is …

   David Miller, Mayor, City of Toronto

   – for constantly harping his city doesn’t receive its fair share from other levels of government, while ignoring Toronto taxes are at a level below most other Ontario cities, e.g. comparable $350,000 houses in Toronto and London are about $1,000 apart, with the former at $2,800 in property tax; for complaining that city council members cannot get things done, while doing little to compromise to get things done.

2. Yes, but a $350,000 house in London buys you a huge 2000+ sq ft house on a very large lot with a private driveway and double garage. A $350,000 house in Toronto will be half the size (if you’re lucky), on a much smaller lot, with maybe a shared driveway and if you’re really lucky, space for a shed. You also get low water pressure and low basements to boot. So yes, the homeowner in London or Mississauga or Whitby should pay more because they have way more ‘house’ than the person in Toronto.

3. Has anybody ever calculated average tax rate per square metre of residential space for the various cities?

4. Does the family in the larger house require more fire and or ambulance service. How about police, libraries, health services, parks, etc?

   Unfortunately, most people tend to view property tax as a punishment. The relationship between what they pay and what services they receive for that payment are not considered. The fixation on rates and assessment values only cloud the issue further. I believe that the most clear and concise way to measure property tax burden is as a percentage of municipal per household spending. This would take into account the unique burdens that each municipality has.

   While the recent Star articles have focused on the disparities on residential taxes between various 905 municipalities and Toronto, it does not shed light on the other side of the equation.

   For 2006 the city of Toronto’s operating budget worked out to spending $ 8,422 per household. In Mississauga (combined with Peel region) municipal spending was $3848.29 per household. So while the average residential property tax burden might differ by 25% between Mississauga and Toronto, that only shows half the picture.

   Toronto spends on average $ 8,422 per household while collecting $ 2,174

   Mississauga and Peel Region combined spend $ 3,848 per household while collecting $ 2,800

   In Toronto, the property tax on an average home represents only 26% of the actual cost of services.
   In Mississauga, property tax on an average home represents 73% of per household cost of services

   The truth is that the purpose of property tax is/was to pay locally, for services provided locally. What Toronto taxes are should be relative to what Toronto spends not London or Mississauga. Within each city the relative burden between classes should be considered.

5. I pay $2600/year for my 79 m2 house in Central Toronto, and my parents pay $4800/year for their 232 m2 house in Pickering. That works out to:

   Central Toronto: $32.91/m2 or $3.05/sq ft
   Pickering: $20.68/m2 or $1.92/sq ft

   So my parents in Pickering are paying much less per m2 than I am, by far. Our houses are worth about the same, but they have way more house than I do, and pay less per m2 to boot!.

6. Glen, looking at all spending but only property tax revenue distorts the picture. (It’s unfortunate the city includes all TTC expenses in the budget, instead of just the net subsidy.)

   For example, the TTC spent about $700/household on only $160/household in taxes. But they’re collecting about $500 a year in fares from the average household, which is still a cost to local residents even if it isn’t on the property tax bill.

7. But Glen, one thing your calculations don’t address is the fact that many 905 residents use City of Toronto services (such as the TTC) which are funded by the City of Toronto but not by the 905 municipalities. Going by memory, 51% of the City of Toronto budget went into the TTC, yet a significant percentage of riders are 905ers who do not pay property tax in Toronto. That is a big part of the reason why the ratio you quoted is so low.

   I believe the most equitable form of comparison is cost per m2, and in that light, Toronto homeowners pay their fair share compared to our neighbours.

8. The TTC represents 49% of the capital budget, but much (much) less of the operating budget at around $300 million (of $8.2 billion in ’08). Of that, well over half the cost is borne by fare-paying riders (every rider, no matter where they live). That said, the difference is paid for by Toronto property taxes and some provincial subsidy (generated by province-wide taxes).

9. Leo,
   The TTC is not the largest expenditure for the city. Have a look at the image I have in my blog here………

   http://southofsteeles.blogspot.com/2007/09/we-need-more-other.html

   It is number six on the list. Maybe the 51% comes from the capital budget not the operating? Seeing that capital costs are amortized, only the yearly interest and capital cost would appear on the operating budget.

   Yes, many 905ers use the TTC. But also consider that more 416ers work in the 905 than the other way around. This shift, according to the city of Toronto, took place in 2001. So more Toronto residents use 905 roads and services than the other way around.

   Missing from your calculations is the money that the 905 municipalities send to Toronto (pooling). Also the huge discrepancy in provincial funding for health, child care and adult ESL, etc. According the UnitedWay it amounts to over $2500 per household more for Toronto than the 905 average. I find that shocking. Consider that the 905 region has more jobs (working families), more immigrants, and much longer wait times for services and that this disparity still exist.

   Property tax should only be related to house size when expenses are. That is not the current reality.

10. Matt,

    Yes it is a cost to local residents. But it is also a benefit. In the 905 region, public transit is less of an option. Transportation cost are not lessened though. They are increased. The difference being that the municipality is not the service provider.

    No one is forced to use the TTC. The only time fairness crops up in this issue is the shortfall in what the TTC recovers in fairs and their actual expenses. Seeing that residents of Toronto, in part, must financially support the TTC wether they use it or not, that is a legitimate question of fairness. I would support a different, lessor, rate for citizens of Toronto. But I would also extend that notion fairness into other areas.

11. Re: Glen’s comment: “Does the family in the larger house require more fire and or ambulance service. How about police, libraries, health services, parks, etc?”

    The family in the larger house might not “require” more of these services, but it will cost more to deliver these services in low density areas. The lower the density, the higher the cost for some services will be, especially for such things as snow removal, garbage collection and even infrastructure items such as roads, sewage, water.

    Maybe residential taxes in Toronto are lower than they should be (because too much of the burden has been shifted to the non-residential property base)…but to expect that they should be at the level of what is the case in other more sprawling municipalities where density is much lower is not a fair comment.

    Taxes should be related to the cost of delivering services within a particular municipality — and property value only makes sense as a point of reference in terms of divying up the total cost for individual property owners “within” a particular municipality (think mill rate).

    Unfortunately, the Toronto Star and our local politicians (Mayor Miller chief among them) speak as if property value comparisons should apply across municipalities. When you are talking about municipalities that vary greatly in terms of density, this is nonsense and a reflects a distorted understanding of what market value assessment means. The cost of delivering many services should be considerably lower in higher density municipalities. To make comparisons with suburban municipalities where space and frontage are several times what they would be in Toronto for a home of comparable value is to compare apples and oranges.

    The Mayor’s recent comments that Toronto councillors (and real estate agents) should proudly trumpet that taxes in our city are much lower than in the surrounding areas for homes of comparable value are beyond ridiculous given the variance in house/lot size between homes of equal value in Toronto and in surrouncing jurisdictions. In Toronto, 400k might get you 2bedrooms and a 15Ft frontage — whereas in some other parts of the GTA, it might get you a castle complete with a 4 car garage (and maybe even a moat).

12. Sam,

    The efficiencies from increased density only go so far. Looking at the budget, I can’t see much more than a 10 to 20% savings.

    Most importantly, as you pointed out, tax in any municipality ‘should be related to the cost of delivering services within a particular municipality’. In this case Toronto fails miserably.

    Toronto’s low property tax are not a product of density. They are not a result of financial frugality. They are a result of having the non residential classes and the Province subsidize the residential class.

    Using 2006 data from the Municipal Performance Measurement Program it shows that Toronto spent $8,422 per household in 2006. On the other hand Mississauga and the region of Peel combined, spent $3,848.29 per household.

    So the average household in Mississauga pays $500 per year more in property tax than the average household in Toronto and gets $ 4,573.71 less in services.

13. Glen,
    I agree with much of what you said but density efficiencies should be somewhat higher than 10-20%. As I said above, I agree with you that too much of the property tax burden has been shifted to non-residential classes.

    The key problem as I see it though is that things are being paid for through the property tax system that shouldn’t be. (The situation existed prior to Harris but he certainly aggravated it.) And many of these costs ARE density related in that the higher the density the larger proportionally these costs are likely to be since you need proportionally more of them than you do in lower density municipalities (ie the transit system, social housing, social assistance). It’s not right that these costs are coming from a way of taxation that is not linked to income. (Of course, Toronto Council also seems to squander some money on such things many would not consider needed services at all, like buying those new huge blue box bins at about $70m — yes recycling is good but did we all need the new mega bins to be encouraged to do it?)

    My guess is that despite talk of a forthcoming report, the province is going to be somewhat loathe to reassume some of the costs which should not be funded by a property tax system. That’s why I think we have a province that has passed the City of Toronto act giving new taxing powers to the City. That’s why the province will likely support Mayor Miller’s bid for a strong mayor system (which isn’t exactly good for local democracy in this City). These move are essentially a way for the province to say to Toronto: “Hey, we’ve given you the power to solve your own problems so don’t bug us anymore!”