Tuesday, February 21, 2012
Yes, I support the new Coquitlam budget
On Monday night, seven of my council colleagues and I voted in favour of a new budget for the City of Coquitlam. Only one councilor, the perpetually opposed Lou Sekora, voted against it. The budget wasn’t perfect but, all in all, I am satisfied that it is responsible in two important ways: it relieves some of the ever-upward pressure on taxpayers, and it provides for all the important services that our residents need, including new firefighters and police officers.
During the run-up to the election last fall, my main campaign pledge was to cut back on the high rate of property-tax increases. A look at some of the figures over the past five years shows the problem: In 2007, the average tax rate increase was 5.42%; 2008, 5.175; 2009, 7.11%, 2010, 4.96%, 2011, 3.18%.
On Monday, we passed a budget calling for an average tax rate increase of just 3.16%. I would have liked to have seen the figure under 3% and, indeed, worked hard to achieve that figure during our closed-door budget deliberations, but I’m just one voice on council and I couldn’t always persuade the majority of my colleagues to see things my way.
You might also remember that, in late September of last year, I signed the Canadian Federation of Independent Business’s Taxpayer Pledge. Here’s how the three-point pledge reads, with my analysis following each section.
1) Property Tax Fairness – by committing to reduce the gap between what commercial property and residential property owners pay, you would be committing to help create conditions that enable small businesses in your community to thrive.
PROMISE KEPT: While council has been working slowly to lessen the gap, by implementing a 0.75% tax shift annually for the past several years, the pressure from the CFIB and pledgers such as me clearly got through, and council increased the shift this year to 1.0% percent. The result will be that, while the average tax rate increase will be 3.16%, it will be 2.56% for commercial properties, and 3.56% for residential properties. Worth noting is that the business-tax rate reduction will bring the rate to 4.66 times that of the residential rate, as opposed to 4.85 times larger last year. It’s still one of the highest rates in the region, but the actual tax bite is in the middle of the pack because of assessment differentials.
2) Reasonable Spending – by committing to keep operating spending increases reasonable, i.e., at or below the level of population growth and inflation or the rate of growth in disposable income, you are giving yourself the fiscal room to reduce taxes and fees, not increase them.
PROMISE KEPT. Here’s the calculation. The Consumer Price Index for last year registered a 1.9% increase, while Coquitlam’s population grew by 2.1%. Add those two figures together, and you get 4%, which would be the maximum allowed increase in operational spending. So, what is Coquitlam’s operating spending increase for 2012? There are two ways of looking at it. First, if you add up all operational spending, even including spending for which the city is receiving grants or transfers from other levels of government, our spending will increase 3.92%. Second, if you look at only operational spending that is directly supported by the taxes we raise ourselves, our increase will be 2.92%. Either way, we’ve bettered the target.
3) Transparency, Openness and Accountability – by supporting in principle, the creation of a Municipal Auditor General for BC, you are building on and enhancing your already existing systems of financial reporting, and standing to benefit from the best practices identified through performance audits.
PROMISE KEPT. I supported the Local Government Auditor General from the outset, and am pleased that the provincial government has now enacted legislation to bring this position to life.
I am pleased that we have a budget that allowed me to meet the CFIB pledge. But there’s work to be done. For starters, I’d like to see the average annual residential property-tax increase to be more in line with the average or median rise in household income. With this in mind, it appears the 2012 tax increase is about one percentage point too high.
And there’s one more word of caution here, and that’s the unknown impact of the upcoming contract talks with the city’s 1,400-plus CUPE workers. I ended my budget speech last night with a request to CUPE to restrain their contract demands. They’re coming out of a contract that saw CUPE members enjoying very large annual increases (in the 4% range) for several years. CUPE salaries are now considerably higher than those paid to comparable workers in the private sector. Personally, I’d favour a “net zero” contract over three years. This would be prudent and positive.