One of the reasons Mississauga has been so financially successful over the years is because of its innovative approach to budget financing.
Going back to Town of Mississauga days, the municipality negotiated the Big Three agreements with Erin Mills Developments, Markborough Properties and S.B. McLaughlin Associates — forward-thinking agreements that set out levy payments and committed the developers to pay for some of the “soft costs” of development, such as arenas and libraries, as well as the traditional roads and sewers. That deal mitigated the effect of growth on ratepayers, if not on the landscape, then at least on their tax bills.
In the 1980s and 90s Mississauga began placing a small surcharge on the operating tax bill of residents to pay for needed capital projects. Although budget purists complained that the property tax bill should only technically be for operating expenses, the advantages were obvious.
Instead of borrowing millions of dollars to pay for new projects, and paying the cost three or four times over in interest charges on debentures, the City adopted a pay-as-you-go principle.
When Doug Lychak became city manager, the City even issued a special two per cent capital levy to pay for five specific projects: the sports complex, the arts complex, the public gardens, the City Hall annex project (which was supposed to go on the east side of the square in front of the Central Library) and the Transitway, which is now known as the Bus Rapid Transit line.
It was the smart way to do business and taxpayers could see the logic. Collect a nice pool of money up front with a small surcharge each year for big projects and save big bucks on wasted interest charges.
The City has used this philosophy for years and built up a good quantity of reserve funds for the rainy days it knows are coming: when growth stabilizes and lot levies and tax assessment no longer provide an annual buffer against tax hikes.
In retrospect, Mississauga probably should not have instituted that decade-long moratorium on tax hikes which made it and a certain tiny perfect wrinkled mayor so famous. A one or two per cent hike in each of those years could have been set aside for the infrastructure crunch the City knows is coming: when all of those roads built in the 1970s and 80s have to be rebuilt and the community centres refurbished.
Which brings us to yesterday’s 9-2 decision (Councillors Corbasson and Mullin opposed) by Mississauga City council to approve in principle a five per cent special levy to be set aside for infrastructure repairs.
“The feds have shown their hand,” says Ward 7 Councillor Nando Iannicca. “They are absolutely flush with cash. They have all this money and they didn’t give the cities a dime.”
So Mayor Hazel McCallion and the City are launching the Cities Now campaign
to fan the flames of discontent with the Harper government in advance of the pending federal campaign. Or, as the City's press release puts it, "Council has no option but to step in and take a portion of the tax room created by the federal government's income tax reduction announcement."
This could be a case of wise men (and women) rushing in where fools have failed to tread.
Even if Ottawa comes to the table, Mississauga will still be staggeringly short of the $75 million annually that it will need to maintain its infrastructure. This money will be needed in any event and is more prudent long-term planning.
If Mississauga, a relatively young municipality that has been fairly well-managed is in this kind of shape, what does it mean for the rest of the country’s municipalities?
Will Mississauga taxpayers accept an 8.9 per cent tax hike next year when they already pay a lot more taxes than those whiners to the east of us?
If Hazel says it’s good for us, history says we will.
Ward 11 Councillor George Carlson says the calls he gets aren’t generally complaints about how high the taxes are, they’re complaints about the services that are lacking.
"Politicians are gun shy about how well informed the public really is,” he says. "All the people who understand, and there are lots of them, they don’t call you."
Having driven last weekend through the desolation that is downtown Detroit, Carlson says he doesn't think anybody should be too concerned about paying another $50 a year to be assured no bridge you drive across in Mississauga is ever going to fall down.
Comments (4)
Sorry, John, had to return to this in light of last Monday's Audit Committee meeting.
I'm the only outside human being ever to sit in them so I have a comment.
Regarding you writing:
The main reason is that no one's ever gotten to their books. Slick literature cranks out Fiscal Success Stories and the public is lulled into believing all is well.
That's the most efficient way to run a city. Announce that you "lead Canada in management" and then ensure the public NEVER see your private face.
Signed,
The (I've seen the private face) Mississauga Muse
Posted by The Mississauga Muse | December 3, 2007 7:22 PM
Posted on December 3, 2007 19:22
I've stopped being surprised at how politically astute Ward 11 Councillor George Carlson is. Not only can he say something like: "All the people who understand, and there are lots of them, they don’t call you," but he's so in tune to his constituents that he knows he's right.
Posted by George Winter | November 12, 2007 9:45 AM
Posted on November 12, 2007 09:45
John,
Yes the City of Mississauga has been run in a very fiscal way over the years but that has helped and hurt us. There is nothing wrong with borrowing money to fix a problem. Borrowing money and being hap hazardless with it is wrong. By the City not borrowing money it has allowed some of the infrastructure to decay to the point where fixing it now will cost more than it would have originally. Let us say for example, your house needs a new roof in the fall but you have no money. Do you wait until the spring, when you have the money or do you borrow the money know and fix it? If you wait until the Spring, the winter weather will cause a leek and destroy your ceiling, so know you have to spend the money to fix the ceiling as well. If you borrowed the money in the fall, fixed the roof and then paid the loan off in the spring you total cost would be much less. Sometimes it is a better idea to borrow money and fix things than to wait until you have the money in hand.
The City needs to also look at other revenue methods. We have advertising on our buses why not charge a license fee to cabbies and allow them to have advertising on their cars, like they do in some US cities. This may not be a lot of money but it is a start. Yes, the Cities need to continue to lobby the Federal and Provincial governments for funding. But, the Cities also need to start thinking outside of the box to generate revenues, doing it on the backs of homeowners should not be the only method.
Posted by Sebastion Patrizio | November 9, 2007 10:05 AM
Posted on November 9, 2007 10:05
Hi John,
You wrote:
As you know, I'm a liberal. But I say YOU HANG IN THERE STEPHEN HARPER! DON'T GIVE ONTARION MUNICIPALTIES A PENNY! (except Brockville)
Like why toss good Federal money down the Ontario municipality big black hole of "Hey, Where Did THAT Go?"...
Municipal peeing-away-$$$$ was one reason Mike Harris happened. People seem to forget that.
Regarding the stupifying lack of accountability --from the Ombudsman's office:
Yesterday, Councillor Parrish referred to municipalities as the "children of the Province".
These provincial municipal children are Hellspawn --protected from accountability by the Province's own legislation.
McGuinty knows that. That's why he'd rather have Harper hand over money to the kiddies instead of Ontario $$$.
Let Harper fling good money down the municipal hole and then be spun about how Trust Quality and Excellently it was all spent.
McGuinty knows with good reason why the Provincial spiggot should remain tight.
He knows there's no accountablity.
As far as accountability and oversight, the Ontario Ombudsman, pronounced Ontario as dead last among provinces in the accountability arena.
One way of confirming this is by how often you will hear Ontario municipalities crow about accountability and transparency (see today's Peel Regional General Committee agenda).
Yes, Peel recommended hiring their own investigator and thus block Peel citizens from access to the Ontario Ombudsman.
Gee. Like, quel surprise, eh?
I still cling to Brampton going its own way and keeping its deflector shields down. Brampton's got good people in Fennell, Moore and Miles.
But there's only one way we'll find out if I'm right about my perception of Brampton...
Signed,
The increasingly disillusioned Mississauga Muse.
P.S. There goes the possibility of me declaring refugee status at Peel Region...
Posted by The Mississauga Muse | November 8, 2007 5:38 PM
Posted on November 8, 2007 17:38