Property taxes pose a dilemma

By Bob Bruton – Barrie Examiner April 26 2012 

It’s an old argument, but one which will affect service levels and their costs for years to come in Barrie.

What should property taxes pay for? The answer used to be services for property, not people.

So property taxes were for water and sewer services, waste collection, sidewalks, snowplowing, streetlights, police, firefighters, etc.

Not anymore.

In Barrie, property taxes also pay for health care, education, recreation, culture, downtown revitalization, libraries, transit, parking, court security and special events, just to list some.

It’s not a question whether these uses are worthwhile. For the most part, they are.

The question is how to pay for them.

“There is (council) direction that we move costs off the tax rate and onto user fees,” Mayor Jeff Lehman said, “but every one of them are hot-button issues.”

“It is ultimately about finding a balance, and flexibility,” said Ed Archer, the city’s general manager of corporate services.

Barrie councillors and city staff are struggling with this issue.

In recent years, the city has tried to shift more of the burden to user fees — water and sewer charges being the most telling example. The plan is to eventually have homeowners, businesses and industry pay the full cost of water/sewer services.

Electricity bills, paid to PowerStream (the city is a part-owner), are moving in the same direction — even though the province has a large say in hydro prices.

City staff are looking at a plan to have residents pay a larger and larger percentage of the cost of recreation programs and services.

But Coun. Lynn Strachan said city staff need to have the flexibility to make programs available that meet demand. There should be some exceptions, however, like swimming lessons.

“People need to learn how to swim,” she said. “We live by the lake.”

Strachan said there are other benefits to city subsidized services. Active teens are less likely to be a problem for police. She also noted that user fees can encourage behaviour, such as recycling.

“Maybe people don’t need to learn how to dance, but it is still fun. People need to get recreation and exercise,” Strachan said.

At the heart of the user-pay philosophy is policy direction in the city’s financial framework.

It states ‘user fees should be used as a full cost recovery mechanism for services that are provided for the benefit of individuals rather than for the community as a whole and particularly where the use of the municipal service is discretionary to the user’.

So if the true cost for an hour of ice time being available in a city arena is $250, that’s what users should be charged.

If an art class at the MacLaren Art Centre costs $100 to hold and there are five participants, they should pay $20 each.

This way those who don’t play hockey or take art classes won’t have to subsidize the activities of those who do.

But it’s not quite that simple.

Coun. Bonnie Ainsworth said it can’t get to the point where people have to pay an extra $10 every time the snow plough goes by their home.

“I don’t feel comfortable charging city taxpayers user fees for core services,” she said. “To come back and put your hand out for more, I don’t think that is appropriate.”

Coun. Michael Prowse said councillors need to have the discussion every six months.

“Is there an appetite among our residents to absorb the charges and keep the property taxes lower?” he asked. “It’s a question of balance.”

Coun. Brian Jackson said residents have to understand the user-pay philosophy.

“You have to educate people why you are doing it, why you are making them pay.” he said. “That’s the biggest challenge.”

“I am comfortable with user fees, to a point,” said Coun. Doug Shipley, “but it comes down to needs and wants.”

There’s also a potential political advantage to making user fees pay a greater percentage of city service costs, aside from the fairness. This keeps property taxes lower than they would be if they were relied upon more heavily to pay for services.

And it’s easier for politicians to get re-elected if tax levels are reasonable.