Debt reduction efforts hike York taxes 4.8 %
By Bill Rea

There was a lot of cheering among York Region officials last month when the province announced it would be phasing out GTA pooling.

But the problem the Region was left with was what to do with the saved money.

Councillors spent almost three hours debating that Thursday, before deciding to put it toward debt reduction, at least for this year.

That is going to contribute to a 4.8 per cent increase to the Regional portion of property taxes, according to the 2007 budget that council approved in a split vote.

King Mayor Margaret Black was among those in favour of the budget, which finally passed in a vote of 12-6.

Black later commented that a lot of people don't understand the idea behind pooling. But they do want taxes to be as low as possible, with service levels as high as possible. "They have high expectations," she said.

She added she was moved by the need to address debt levels, as well as the growth expected in York in the coming years.

"If we ignore the factual information about what is going to happen in York Region and don't get ready to provide the services, we're going to pay big dollars in the long-run," she said.

Black also stressed the need for the social programs called for in the budget. "If you don't take care of the people with needs, you end up having political unrest," she declared.

Commissioner of Finance Lloyd Russell said the increase will work out to an additional $80 in taxes for the average home in York, assessed at $371,000, bringing the Regional tax bill up to about $1,768.

The phasing out of pooling was announced by Finance Minister (and Vaughan - King - Aurora MPP) Greg Sorbara in the provincial budget last month. Pooling was instituted in the late 1990s in an effort to spread the costs of social services around the Greater Toronto Area because it was thought Toronto was being expected to pick up too much of the burden. This has been a sore point around the Regional council table for years.

It was originally thought pooling was going to add $95.4 million to this year's budget in York, but the phase-out has already started to kick in, meaning the contribution was rolled back to the $2004 level of $79.5 million. Russell said it will be further reduced by $13.2 million annually until the allocation is gone.

But there was another downside, as Russell explained. A grant of more than $9 million had been anticipated under the Ontario Municipal Partnership Fund, but the Region is no longer eligible. That means there will only be a pooling saving this year of $6.446 million.

Regional CAO Michael Garrett said they had originally been looking at a larger tax increase, before the pooling announcement from the province.

"That's been very good news," he declared. "Our fiscal future is looking a lot brighter than it was before."

But he also stressed the need to use that money to increase downpayments on capital programs and cutting debt costs. He added they are still hoping to retain the Region's AAA credit rating, which will help keep costs down for other projects, like the proposed subway extension into York.

Russell said the budget calls for operating expenditures of roughly $1.2 billion, as well as some $565.4 million in capital projects.

On the positive side, he said the Region has been enjoying "pretty healthy" assessment growth, to the tune of about 3.3 per cent.

Of the 4.8 per cent increase, Russell said 2.8 per cent is going toward maintaining existing programs and services, another one per cent is for capital asset replacement and the rest will be for pay-as-you-go debt reduction effort.

Staff had been considering a tax hike on the order of 5.4 per cent, but they were able to find ways to cut about $3.6 million in expenses to get it down.

For this money, in addition to the debt reduction, the Region plans to maintain almost 3,500 lane kilometres of roadway, continue implementing of a sources separated organics program, add about 5,500 service hours to the Viva transit system and another 51,800 service hours to York Region Transit, process about 143,500 court charges, administer more than 6,500 social housing units, provide some 84,600 longterm care facility beds, offer more than 254,000 emergency medical service hours (Russell said an additional ambulance with staff will contribute to that), etc.

The planned capital improvements include an additional 52 lane kilometres of road to be built and another 70 to be resurfaced, 28 intersection improvements, and five bridge and culvert rehabilitations.

The major road improvements in the works include Bathurst Street, from Wellington Street to Mulock Drive.

Other capital items include 21 new and three replacement conventional buses, three specialized buses, four support vehicles, land acquisition for garages for transit vehicles, 14 rapid transit vehicles and work on the planned subway extension. As well, there will be 36 kilometres of transmission water mains, additional storage facilities, a new pumping station, 10 kilometres of sewer and forcemains, along with 19 new and 114 replacement police vehicles, one new and nine replacement ambulances and a 50-unit affordable housing apartment building.

Councillor Mario Ferri of Vaughan wondered how he was going to explain to his constituents that pooling savings were going to debt reduction instead of cutting taxes. Russell said there are other issues at work on this, aside from pooling, adding they would be looking at even higher taxes in future if debts get too big.

Ferri said he understood. "I don't know if my neighbour will buy it quite that way,"he remarked.

Garrett likened it to an increased down payment, pointing out a greater downpayment on a house adds up to lower mortgage costs.

"I just think we've got it wrong," commented Councillor Jack Heath of Markham, adding this issue came up in last year's municipal elections. He had said a lot of the tax increases people were paying were related to pooling, and he didn't promise that if pooling were cut the Region would keep the money.

Heath was also concerned that council had no input on the decision to put the money to debt reduction. It had only been discussed in committee.

"It's the first time I've ever talked abut it," he said, suggesting they consider debt reduction in next year's budget while giving the taxpayers some immediate benefit this year. "We've gone from taxation without representation to taxation without consultation."

Regional Chair Bill Fisch reminded him the matter just came up late last month with the provincial budget, adding there was only one meeting for the administration and finance committee of council where it could have been discussed.

Newmarket Mayor Tony Van Bynen called the budget "very responsible," adding a lot of the money is going to reduce the mortgage on the future. He also said residents don't want service reductions.

"I like to pay off mortgages," remarked Councillor Brenda Hogg of Richmond Hill. "I don't like to carry them around for 50 years."

But she also pointed out a lot of the budget is being driven by downloading. "Municipalities were never expected to pay for subways," she said.

Councillor Gino Rosati of Vaughan charged the tax increase is more than what people can afford, adding something along the lines of the rate of inflation is more reasonable. He also said it's not fair to ask today's taxpayers to fund what's planned for the future.

Black countered there is growth planned for York over the next 25 years, along with the fact the population is aging and is going to have more demands.

"We must be ready for the changes," she said, adding they need to be visionary, "or we will definitely regret it in the long-run."

East Gwillimbury Mayor James Young didn't dispute the Region has needs, but asked if there's enough money coming from the federal and provincial governments. "We've purchased a luxury home and I don't think all of us can afford that," he remarked.

Young too asked why taxpayers should pick up the capital costs of growth.

"It's a matter of 'pay me now or pay me later,'" observed Councillor Joyce Frustaglio of Vaughan.

She also said it would be politically easy to call for no tax increases, but councillors are elected to run a municipality.

"I will support this budget because I think it's the responsible thing to do," she said.

Markham Mayor Frank Scarpitti agreed it would be nice to apply the pooling saving to taxes. "Really, it would be a feel-good for about six months," he warned, adding bigger tax hikes would be a reality as soon as work on the 2008 budget starts.

Fisch agreed that residents had wanted the pooling money used in York, as opposed to Toronto.

"I think we are returning the money to taxpayers in one form or another," he remarked. "Everyone's getting benefit in one form or another."

Georgina Mayor Robert Grossi said it's unfair to expect a little old lady in Pefferlaw to pay for a subway in Vaughan, as he unsuccessfully lobbied for a deferral of the budget items related to transit.

Ferri put forth a motion, that didn't pass either, to split the pooling savings equally between the Region and the local municipalities.

Heath proposed deferring the whole budget until there could be a workshop session for councillors to sort out the concerns. Russell told him the Municipal Act requires the budget be approved by the end of April. He joked if it isn't, "I'd probably go to jail."

Frustaglio was successful in getting staff to come up with report on how the pooling savings could be dealt with in future years.