Tuesday 21 June 2011

City financing: thoughts from the peanut gallery

I am going to tread on other peoples' turf here. There are other pundits who are more knowledgeable about City financing than myself, like this guy and this guy. However I am still compelled to chime in because I don't believe this pony has been flogged quite enough. We have been hearing and reading about "new deals" and calls for a share of the PST and whatnot for years, but the whining from the Mayor for more money continues, and is sure to continue as long as the City of Winnipeg is dependent upon the province for funding.

Incidentally, I was just watching feeding time on the falcon cam, and it struck me that it very much resembles the relationship between Sam Katz and the Provincial government.

Yes, we could cut a new deal for a share of the PST or some other revenue stream from the province, but wouldn't it be better if the City wasn't dependant on the province at all? When any organization is responsible for funding itself it tends to be more responsible with its money. This is true with people and this is true with governments. You need look no further than our provincial government and it's free spending ways as evidence of that.

How would you like it if the City could fund itself AND decrease property taxes? While the City of Winnipeg is squawking and begging for Mother Broadway to tear off hunks of it's revenue and stuff it down it's gullet (okay, maybe the falcon metaphor isn't great), the City is collecting close to half a billion dollars a year for the Province. Education is a provincial responsibility, but it is funded in part through property taxes collected by the cities and municipalities. I do not know why it is the way it is, but I suspect it's just one of those things that seemed like a good idea at the time and nobody has ever bothered to change it.

This blog post is certainly not the first time that somebody has suggested taking education off the property tax roll, but each time it seems to be shrugged off as some unobtainable pie-in-the-sky idea. The political landscape in these parts, both at the provincial and civic level, has been devoid of bold ideas for far too long. Perhaps it is time to take this concept a little more seriously.

Transfers to the City from the Province in 2009 totaled $187m (both operating and capital). As mentioned, the City collected $474m in school taxes for the Province. If the Province funded education in its entirety and dropped the transfers, the City would have room to increase property taxes to fund itself and still able to reduce the overall property tax bill. In fact, they could increase their revenues by $250m while still reducing the tax bill. No more complaining about not getting enough money from the province to fix roads!

The PC party needs more votes in Winnipeg if they want to form the next government. This issue could be a winner for them. Vote for us: we will reduce your property taxes! Of course, that leaves the Provincial government with a $287m hole to fill, but giving up a point of the PST would be almost as painful. Stop me if I'm out out to lunch here, but if we need to increase funding to Winnipeg this is the best way to do it, plus it simplifies the education funding situation:

We elect trustees for each school division who have the task of setting a budget. While the Province imposes various requirements on them and does not give them the autonomy to close underutilized schools, they also cannot raise the mill rate or else the Provincial government will punish them by withholding their "tax incentive grant". They are between a rock and a hard place. That would no longer be a problem if everything was funded centrally.

If $287m is too big of a pill for the Province to swallow, they could always reduce but not eliminate the education property tax. Have a smaller fixed mill rate for education but still eliminate transfers from the Province to the City. Provincial funding will no longer be driven by what provides the best photo op. No more whining to the province for money and no more sharing the spotlight with a grinning Premier when the ribbon is cut.

Do you want another helicopter? Fund it yourself. Too many pot holes? Fix them yourself. Is the traffic snarled all the time at the new IKEA? Increase taxes by a quarter point and build a bloody overpass like you should have right from the start. You have control over your own revenues. You get the credit. All you have to do is justify it to the tax payers -- as it should be.

School taxes collected by the City:
2008 $465m
2009 $474m

Transfers to the City from the Province:
Operating Capital Total
2008 $135m $53m $188m
2009 $123m $64m $187m


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