Guelph Taxes

There is an article in today’s Guelph Mercury regarding a report suggesting Guelph’s taxes are among the highest in the country.

I have asked our Chief Administrative Officer and Chief Financial Officer to review the report and respond to Council. 

First, Council needs to understand how the index was developed and whether we agree with the findings. 

We participate in independent municipal benchmarking in Ontario which would suggest this might not be accurate.  But let’s find out.

We have investigated similar types of reports in the past and found errors in data and/or assumptions.  Very often these analyses between municipalities neglect to recognize that Guelph is a single-tier municipality.  This means we deliver all municipal services unlike cities like Waterloo, Kitchener or Cambridge.  These cities are part of a two-tier system where the regional level of goverment also collects municipal property taxes to deliver many services. 

Second, if the findings are correct, we need to understand what is contributing to our taxes relative to other municipalities.

The levying of some municipal property taxes are under our control. Council is directly accountable for these taxes.

However, some municipal property taxes are levyed by the Province to pay for provincial services.  These are not under Council’s control.  For instance,  Guelph property taxpayers are treated differently than almost every other municipal taxpayer in this Province when it comes to paying for provincially-mandated social services, childcare and social housing costs.  This adds millions of dollars of additional tax burden on to Guelph’s municipal taxpayers.   Guelph businesses are taxed by the Province for education purposes at a level higher than the provincial average.

Council is entering the 2011 budget planning process.  This presents a great opportunity to review the findings of the report and ensure we provide good information in advance of budget setting to Council and the community.

About Karen Farbridge

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17 Comments on “Guelph Taxes”

  1. Peter Says:

    “This means we deliver all municipal services unlike cities like Waterloo, Kitchener or Cambridge.”
    Can you please outline these services?

    “For instance,  Guelph property taxpayers are treated differently than almost every other municipal taxpayer in this Province when it comes to paying for provincially-mandated social services, childcare and social housing costs.”
    Why is this?

  2. kfarbridge Says:

    As an example the Region of Waterloo controls governance of those things which are of common interest/concern (e.g. transit) to residents across the entire community which includes seven lower tier municipalities. Some of their responsibilities can be found at: http://www.city.waterloo.on.ca/DesktopDefault.aspx?tabid=226. The lower-tier municipalities is responsible for services of more local interest/concern. Both the upper-tier and the lower-tier municipal governments raise funds through municipal property taxes.

    One example as to how we are being treated differently is that of the 57 cost-sharing agreements with municipalities in the province for Social Housing, only five do not use weighted assessment, in whole or in part, to apportion costs between municipalities comprising a service delivery area. The Wellington-Guelph CMSM is one of those five. Guelph and Wellington taxpayers are being treated differently than most municipal taxpayers in the province in their funding of Social Housing. Why this is the case is something the City has been asking for several years.

  3. Peter D. Says:

    Different Peter this time… Great name 🙂

    I dropped Liz Sandals an email asking why Guelph is not on a weighted assessment. I wonder quickly this will be followed up on. Being the Provincial election is in about 10 months I hope to get a quick response.

  4. Jim Grant Says:

    Karen – This morning, on the radio you stated that the recent report on Guelph taxes were the highest in Ontario was erroneous and incomplete based on the findings of the BMA group.
    This afternoon I find the below posted in the Guelph Mercury.

    What’s going on and who do we believe? Am I relating two of the same subject?

    “When asked for this city-requested review by the Mercury, Bruzzese said he didn’t prepare one and didn’t even look at the Frontier Centre report “in any detail.”

    Did those in the community who anticipated he was to review this for the finance committee misunderstand something? Was no such specific request put to Bruzzese?

    It’s puzzling resolution – one likely to be noted by many as possibility quite strategic.”

  5. kfarbridge Says:

    I beg to differ. The consultant did explain that the indicator in question – net municipal levy per capita – and made the point that he took into consideration the fact that we are a single tier community when making the calculation.

    Given that between the time I asked our CFO to have him look into it as part of his annual work for us and his presentation to committee the Mercury and its readers had already come to the conclusion that this was the fundamental flaw with the earlier report, he didn’t belabour the point.

    It is a common mistake made. People compare lower tier cities like Waterloo, Cambridge and Kitchener with Guelph and neglect the fact that the Region of Waterloo also levies taxes on the people who live in those communities.

  6. Jim Grant Says:

    Karen – I am not sure what you are differing with.
    The report that the Mercury has printed or the fact I am confused with what has happened. You said you would have an independent consultant analyze the report and report to the finance committee his findings. Did this happen or not?

    PS – I am one of the Mercury readers and had not come to any conclusion you mention above.

  7. kfarbridge Says:

    The only person who can close the loop on this is our CFO and I have asked for her, through our CAO, to respond. I will post that response once availabe.

  8. kfarbridge Says:

    Part One:
    ________________________________________
    From: Margaret Neubauer
    Sent: January 19, 2011 5:15 PM
    To: Councillors & Mayor
    Cc: Executive Team
    Subject: Scott Tracey – Frontier Report

    I spoke with Scott today regarding Jim’s presentation yesterday. Scott indicated he expected BMA to speak specifically about the Frontier Report. I indicated that I had forwarded the articles and link to the study. I had not asked Jim to incur additional time costs in analyzing and preparing a detailed report on the differences, merely to have a look at it, note the differences in methodology and be prepared to respond to questions on where his findings may be different from the comments in his study.

    I also advised Scott that Jim had confirmed to me that the major differences were that the Frontier analysis did not take into account the differences between single and two tier municipalities, and his study did, and he had pointed that out last night. As the issue had already been identified publicly, and it was a significant difference he didn’t feel the need to go beyond that.

    I also advised Scott that I had also asked Jim to comment on the relevance of taxes per capita and therefore Jim included additional information in his slides, such as Slide 12 on why you have to go further beyond the numbers, to look at some of the drivers behind what causes the differences in levy per capita between municipalities.

    I noted to Scott that it is very important that the City not make decisions solely on high level numbers, but that they understand the drivers…eg transit service levels, volunteer fire departments, age of infrastructure, density, service levels…some may be controllable and a conscious choice for a higher service level, and some may be uncontrollable. The important thing is not to use the wrong number or not understand the number, when making decisions.

    Beyond the brief commentary about the importance of using upper and lower tier, and the additional content in the slide material, Jim was not comfortable with making any further comments specifically about another consultant’s reports.

    Margaret Neubauer
    Chief Financial Officer/Treasurer
    City of Guelph

  9. kfarbridge Says:

    Part Two:

    January 21, 2011
    Ms. Margaret Neubauer
    CFO/Treasurer
    City of Guelph

    RE: Guelph Tax Comparative Analysis

    This letter is in response to your December 14, 2010 request to review the Frontier Centre ranking of Guelph’s tax levy per household, and to supplement our ongoing discussions on the City’s Financial Condition Assessment.

    As stated by David Seymour a senior policy analyst at the Frontier Centre with respect to their methodology on a recent study comparing taxes across Canada “we haven’t allowed for second tier government, which is quite a weakness of our resource in some parts of BC and Ontario where there are second tier governments (article from the Guelph Mercury by Greg Layson).” As such, the Frontier analysis does not take into account the total municipal taxes paid for by households in two-tiered municipalities. For example, Centre Wellington, Woolwich and Kitchener were listed among the top ten least taxed municipalities in Canada however the taxes per household did not reflect the total municipal property taxes and as such are significantly understated. To illustrate this problem, in the Town of Woolwich, the lower tier tax levy in 2010 only represents 28% of the total municipal taxes and in the City of Kitchener the lower tier levy represents only 40%. Whereas, single tier municipalities like Guelph reflect the total taxes and as such are not comparable in this format to two tier municipalities. The Frontier Centre has also not taken into account the amount of taxes paid by the non-residential sector which varies significantly across various municipalities and can distort the results.

    BMA’s approach in our annual study is to include all municipal taxes (upper and lower tier) to ensure fair comparisons of the actual tax burden related to municipal services. Further, our approach is to select similar properties in each municipality based on the defined criteria and apply the actual tax rates for the respective class of property to reflect what property owners would pay in each municipality and in each class. This analysis is undertaken for eleven different property types including a typical bungalow, a two storey home, two different multi-residential properties as well as comparisons in the non-residential sector which have different tax rates depending on the class of property (e.g. commercial shopping, office, industrial). This approach ensures that there is a clear understanding of taxes in each of the sectors based on actual tax rates.

    As we have discussed, municipal tax impact calculations on their own do not indicate value for money or the effectiveness in meeting community objectives. Other factors such as service levels, geographic location, age of infrastructure, density, demographic differences, provincial grant support and user fee levels must be taken into account.
    Caution should also be exercised in comparing property taxes in isolation across different Provinces as the responsibility and associated funding of various services differs (e.g. Social Services which are partially funded from municipal property taxes in Ontario). This will skew the comparative results unless Provincial taxation is also taken into consideration.

    Sincerely,
    Jim Bruzzese, President
    BMA Management Consulting Inc.

  10. Jim Grant Says:

    Great responses but still does not answer the following post by Greg Layson…

    “I took the time to cross reference the list of all Ontario municipalities which are taxed on a single tier, like Guelph, with the cities and their tax rates provided in the Local Government Performance Index prepared for the Frontier Centre.

    Here’s what I found when I focused on cities similar in size to Guelph:

    City Pop. Taxes*

    Guelph 114,943 $3,375

    Hamilton 504,559 $3,296

    Windsor 216,473 $3,216

    Kingston 117,207 $3,215

    Brantford 96,689 $3,156

    Orillia 30,295 $3,032

    London 352,395 $2,948

    Thunder Bay 122,907 $2,938

    Stratford 30,461 $2,900

    Sudbury 157,857 $2,831

    North Bay 53,966 $2,799

    Peterborough 74,898 $2,728

    Sault Ste. Marie 74,948 $2,727

    Chatham-Kent 108,598 $2,590

    Cornwall 45,965 $2,540

    *Numbers taken from Local Government Performance Index

    Aside from Toronto and Ottawa, the two biggest single-tier tax bases in the province, Guelph still comes out on top.

    — Posted by Greg Layson”

  11. Doug Roach Says:

    I fully unseratand the value of public position and the rights therein.
    I am more tha a little confused as to why we are not told the truth with respect to taxes.
    Why are the facts hidden and city communications experts required to present the desired spi?
    I thought this was to be an open. honest and transparent city government.
    It has been far less so far!

  12. kfarbridge Says:

    Perhaps you missed this Jim…

    “The Frontier Centre has also not taken into account the amount of taxes paid by the non-residential sector which varies significantly across various municipalities and can distort the results…..

    …. Further, our approach is to select similar properties in each municipality based on the defined criteria and apply the actual tax rates for the respective class of property to reflect what property owners would pay in each municipality and in each class. This analysis is undertaken for eleven different property types including a typical bungalow, a two storey home, two different multi-residential properties as well as comparisons in the non-residential sector which have different tax rates depending on the class of property (e.g. commercial shopping, office, industrial). This approach ensures that there is a clear understanding of taxes in each of the sectors based on actual tax rates.

  13. Jim Grant Says:

    Thank you Karen. It’s starting to make sense now. Appreciate your input.

  14. Terry Says:

    Jim,

    You seem to have lots to say about everything including taxes.

    So, just how much property tax is perfect for you and your world? We know that property taxes only comprise approximately 15% of all the taxes residents pay yet you’re all over the City about money (hopefully you are sharing this vigor with Harper & McGuinty).

    So do you want to pay $5,000 per year? $3,000? Maybe $250? Maybe nothing is perfect. You just tell the City exactly how much you want to pay in property taxes. That way they can then work backwards and tell you what you’ll get for your money.

    Sure sounds a lot easier than them trying to guess what you want to pay.

  15. Jim Grant Says:

    Terry – Be a good boy now and try to understand some of us don’t live a sheltered life and actually get involved. You probably use the same line with all government opposition parties.

  16. Jim Grant Says:

    Terry – Here’s a PS for you

    Karen Farbridge is a very smart and talented lady. She certainly does not need you to defend her.

  17. Doug Roach Says:

    Terry
    You seem to be looking at this issue from the wrong perspective.
    Rather than trying to figure out the right level of tax, why not try to figure out which city services are truly required and at what cost.
    It’s called zero based budgeting and it works very well in the private sector.

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