How Much Freight Can Average Taxpayer Pay?
Jim Taylor — September 21, 2010
I posted the following on my blog http://www.nanaimo-info-blog.com today which came out of yesterdays council meeting.
How Much Freight Can Average Taxpayer Pay?
One of the things discussed at yesterdays city council meeting was regards the problems some municipalities are facing as a result of industry either closing or in some cases refusing to pay their full tax bill.
An example given were our friends in Port Alberni where the residential taxes went up 25% to cover the loss of taxes no longer coming from industry.
The problem would not be as acute in Nanaimo as approximately 4% of total taxes are paid by industry. There is the desire provincially to reduce the ratio of taxes paid by industry when compared with residential taxes. In this case Nanaimo is ahead of some other municipalities as we had already started to reduce the amount of taxes industry is paying.
The net result regardless of how you want to slice it, is there will be a continuing increasing burden of taxes being shifed to the residential taxpayers in our cities as industry pushes for lower taxes, or simply close shop and move elsewhere.
In Nanaimo there is a relatively small industrial tax base, however a large percentage of city taxes are paid by the commercial or business sector. This fact was pointed out at yesterday’s city council meeting.
The point which was not made, was the fact that commercial taxpayers don’t actually pay the taxes, rather they collect their taxes from their customers, which of course is once again the average taxpayer.
So you could argue that there is really only ONE taxpayer in the province. Perhaps they will come to the same place as industry has, in that they will simply pay what taxes they think is fair, and take the city to court to lower the bill.
Posts and Comments on Nanaimo Governance 
I was reading an email newsletter by American analyst John Mauldin and came across this —
“our infrastructure… is badly in need of repair. In fact, the US Infrastructure Report Card ( http://www.infrastructurereportcard.org ), by the American Society of Civil Engineers, which grades the US on a variety of factors (the link has a very informative short video), gave our infrastructure the following grades in 2009: Aviation (D), Bridges (C), Dams (D), Drinking Water (D-), Energy (D+), Hazardous Waste (D), Inland Waterways (D-), Levees (D-), Public Parks and Recreation (C-), Rail (C-), Roads (D-), Schools (D), Solid Waste (C+), Transit (D), and Wastewater (D-).
Overall, America’s Infrastructure GPA was graded a “D.” To get to an “A” would requires a 5-year infrastructure investment of 2.2 trillion dollars.”
This is a US scenario but it’s clear it holds true for Canadian municipalities which are facing huge and growing infrastructure costs. It’s clear the residential property-owner-taxpayer can’t be expected to shoulder the whole burden. Senior levels of government will have to fund cities at a much higher priority at the same time as the municipal level of government needs to undergo reforms to make it more efficient and responsive to its local citizens.
Taking an extremely simple point of view, backed by no statistics and no studies, my gut feeling is that there’s a serious disconnect between the decision-makers at all levels of government, and those who bear the financial burden that results from those decisions.
We live, it seems to me, in the day of the “professional politician”, those whose lives have mainly been all about politics, with very little time spent in any other arena than the political. When did “politics” become a career choice? In earlier days it was regarded as public service.
As I’ve said, I have no studies, no statistics, but I’ve been around the political scene since before the formation of the first WAC Bennett Social Credit government, which to some degree caught WAC on the hop, in that he had no plan in place about cabinet appointments, as an example. Highways? Phil Gagliardi, a minister/preacher at a tabernacle in Kamloops, had previously worked as a “catskinner”, so let’s make him Minister of Highways. I could go on through some of his other cabinet appointments. My point here is that all of these people had led lives outside of politics before winning elections in their constituencies and then being appointed to cabinet positions.
This “disconnect” between politicians and the voting and tax-paying public began some time ago, but has grown now to frightening proportions. I remember a local MLA, one who might have been expected to be more in touch than many others with the lives of average workers, describing the economy as being “so bad that a lot of people won’t even be able to go on a holiday this year.” ??? Perhaps he was able to, but many I knew hadn’t been able to afford holidays for years. And obviously he regarded the lack of a holiday as an example of “hardship”. Disconnect.
Another, greatly respected across Canada, led one of the charges to boycott South African products during the fight against apartheid. The man was struck virtually mute when I sent him a letter pointing out that the major source of industrial-quality diamonds, vital in mining and oil exploration, was South Africa, so how were we to survive without those diamonds? (Russia was a potential source, but the “cold war” was on.) He had no answer, but was sufficiently honest to admit he hadn’t considered that. Another disconnect.
A highly-placed BC politician who, as far as I can discover, went from UBC graduation to a job as a union organizer. Union organization does not require that a person in that job has ever actually *worked* doing the job that union members do. Perhaps he did, but I find no information that this ever happened. Reported in a newspaper mini-biography as having told one of his Grade 10 teachers that he was going to be a politician, and realized that ambition. But how much experience did he have, as an adult, of the life the rest of us, the “working class”, living day-to-day, many struggling paycheque-to-paycheque, dreading a financial crisis or the loss of a job? Another disconnect?
My personal experience in explaining to a local politico that “lunch wagons” travelling through Nanaimo in the summer months, handing out free lunches to kids, many living in poverty, was an absolute necessity because for many of those kids a free school lunch might very well be the main meal of the day. Free school lunches were not available if schools were closed for the summer. Something that the local politico had never thought of, had never seen, had certainly never experienced. A definite disconnect.
With a declining population of what John Fryer, former head of the BC Government Employees’ Union, once colourfully described to me as “horny-handed tradespeople in hard hats” (and also taxpayers), the well is, as I see it, close to running dry. The husbands of two younger female friends have left Nanaimo in the last few months to work in the Alberta oil patch. Another leaves next week.
We need new political blood, the blood of the dwindling “working classes”, and lots of it. They might very well be inexperienced, they may make rookie mistakes, but at the very least they have a finger on the pulse of the average citizen, and they know that the pulse is fluttering and slowing.
I do not want to see a rerun of a taxpayers’ revolt, knowing that if that were to happen, the “establishment” would remain safe and insulated and that it would be, again, the lower-level workers who would suffer most. The average BC family cannot take much more in the way of increasing taxes. Only my love for BC and the rather elaborate “support system” I’ve built for myself here (at my own expense) hold me here. But when I sit down and look at the numbers, realizing the increase in quality of life that a move to another province might produce for me, it becomes increasingly attractive. I’ve lived in BC’s far north–I can certainly handle long hard winters.
We’re going to end up with two-way traffic: people fleeing BC, as they already are, to find other Canadian locations where the tax burden is not so heavy and jobs are available–passing as they go, the influx of the more affluent from provinces to our east, attracted to BC by the more moderate climate.
If and when we start chopping at the tree, this time we start chopping at the top branches, not the lower ones.
Oh yes, we can get the senior levels of governments to fund cities. It is us, we are the ones that pay ALL of the levels of government. It is us, we are the ones that have to provide the funding for everything. It is us, the taxpayer and we only got so much money. We need to CUT BACK, we need to WATCH OUR SPENDING, we need to SAY NO!
Billions of dollars are needed to provide all types of services, some of which we should not be providing. Too many agencies, both social and cultural need to become more self-sufficient and quit relying on the different level of governments to bail them out and help them.
We have many agencies here in Nanaimo that need funding from Federal, Provincial, Regional and Municpal governments just to pay their administration and rent of commercial offices when they should be holding their meetings in basements and dens and living rooms of their members. They need to be run by a group of volunteers instead of claiming they are ‘non-profit’ when their entire purpose the way they are set up is to find money to pay their staff and their un-needed offices. We need to SAY NO to that type of funding and trust me, there are more of those types of organizations than you can imagine.
Yes, it is going to result in some people joining the unemployment lines and will result in some offices being empty but I ain’t got enough money to keep feeding them, when those agencies used to do just fine, when they needed no funding and were run 100% by volunteers. I know, I used to be one.
SLOW DOWN THE SPENDING BY ALL GOVERNMENTS because WE AIN’T GOT NO MORE!
The City provides ample opportunity to ask questions about the budget on the Budget Forum:
http://www.nanaimo.ca/budget_forum/index.aspx
It also provided considerable information on the budget at:
http://www.nanaimo.ca/EN/main/departments/Finance/budget-and-financial-reports/budget-information.html
and on Finance at:
http://www.nanaimo.ca/EN/main/departments/Finance/budget-and-financial-reports/financial-reports.html
Perhaps we could begin with some suggestions about specifically which budget items might be cut. If one attends the FPCOW meetings later this year you will hear Staff ask this question many times of Council who, too often, don’t have the information needed to reply and thus leave it all in the hands of Staff. Are we to be no different?
Does anyone know, who officially has the last word when it comes to what increases, if any, will be given city staff in the next round of wage negotiations?
I repeat a few suggestions for cost cutting I have posted elsewhere on this blog:
At least $500,000 subsidizes the Port Theatre’s customers and performers, which by now should be able to be eliminated.
The $1,000,000 being paid to run the conference centre needs examining to determine if it is simply ‘good money after bad’.
The $300,000 to the downtown business group needs some serious accountability as to how it is being spent and what return we actually get.
Examine some special tax relief that is and has been given to a select few downtown businesses. The rail station comes to mind as well as a few other businesses.
Questionable advertising programs which are supposed to support tourism in Nanaimo. Need to be looked at on a campaign by campaign basis with some ‘hard’ evaluation as to the cost benefit.
A long hard look at changing some agreements which seem to have made it possible for Mr. Berry to be paid $500,000 to do nothing for two years.
Jim:
I believe I am correct in saying that the City Manager, Mr. Kenning, has final say in approving staff increases in principle, but only Council can approve the budget which makes the CM’s recommendations manifest. This dual role in found in most things at City Hall. Staff can recommend actions, but Council must approve in major matters such as bylaws, procedures etc. Within the framework provided by bylaws and procedures Staff carries out routine administration independently. These roles can be confusing and confused from time to time.
OK Jim: If I read you figures correctly we have about $700,000 in cuts listed, i.e. the Port Theatre subsidy 0f @ $500,000 and $206,000 in general tax revenue to the Downtown Partnership (the only BIA in the province of which I am aware that gets anything from general tax revenues). This represents about a 1 tax reduction. These suggestions can be put before the public and to Council directly with supplemental argument for why these cuts should be made.
Then there are some suggestions for research re: the cost of conference centre operations, tax relief for historic buildings, advertising costs, and staff benefits for service. Who will undertake these studies? And how much will they cost? Perhaps we can put together the resources to do them ourselves. Any ideas?
To eliminate the Port Subsidy is a long shot. A reduction of that subsidy is an easier target with a plan to reduce it to zero through a ticket surcharge for events. There are lots of events and as discussed earlier a raise in ticket prices would cover the City of Nanaimo’s contribution.
The Downtown Partnership is again a way to reduce money by reducing the City’s share over a period of time. The City should also not be in charge of collecting the funds for the Downtown Partnership, it should collect it’s own funds for themselves.
A 10% redirection of City projects postponing some of them for 6 months to a year and postponing the following ones the same will reduce the increases projected for the next 5 years. It means that some projects will be done up to a year after the projected timeframe that it already set, but if it reduces tax increases to the ZERO we need, it is worthwhile.
In regards to Vancouver Island Conference Centre, Island Corridor Railroad and other commitments, a zero increase in any additional funds over last years would be the best we could demand. Council has made a commitment to those projects and to back off them could be more detrimental than good.
Jim rightly points out that the conference centre requires about $1M in taxpayer subsidy to maintain operations during the calendar year.The overall cost to the taxpayer is over $3M per year when you include the interest on the money borrowed to construct the facility,the $100K for annual capital improvements included in each years budget and other significant costs that are not divulged such as staff manhours and expenses expended to try to dig themselves out of the financial hole they produced for the taxpayers of Nanaimo.
It is interesting to compare the winners and losers in the conference centre project.Gary Korpan lost his job,so he is the second biggest loser.Jeet Manhas is a loser because he failed to stretch his luck into a provincial seat.He is also the ultimate winner because of his appointment to the Harbour Commission.If he should somehow become the point man for the cruise ship pier then the taxpayer will likely become the ultimate loser once again.Remember the hotel component fiasco.How can we forget Jeet’s frequent assurances of how hard Milennium was working and how fortunate were the citizens of Nanaimo to have such a dedicated partner on this project.John Ruttan was a winner by taking the mayoralty,until he showed up on the job to prove otherwise.Ron Cantelon was a winner but hopefully this will be shortlived once recall gets underway.Of course the big winner was Jerry Berry who brilliantly levered his many shortcomings into a $625,000 windfall.The Nanaimo taxpayer was once again the loser,big time,not only for for the $625K but for the immediate appointment of Al Kenning to City Manager instead of making a search for the best candidate.Councils decision to give Kenning the job makes him a winner also,as he plays out the string,and if he should be so fortunate,pull off a Jerry Berry.
Wayne: I believe you missed the million or so annually in interest which were brought into the city by the $30 million which was removed from our reserves and paid into the hole on Commercial Street.
Yes,indeed Ron.There is also the matter of the $3M that our Council and Staff gave to Milennium,for which nothing of any value was received in return,plus the lost of interest on this sum of money had it not been wasted.I can only imagine,because the taxpayer will never be told,how much money was spent on staff slaries and expenses,legal fees,accounting fees etc towards this financial disaster.And still,we have a Mayor,some of Council and staff who continue to push for another $300K or so to be wasted on
a Mickey Mouse scheme to attract a developer.Will this nightmare ever end?
Yada, yada, yada. Blaming the conference centre and those that are no longer in position with the City does nothing to help those that are now in position and the changes they want to make. Al Kenning and John Ruttan are current members of the City of Nanaimo power and if they need to be blamed, do so, but to include those gone like Jeet, Korpan, Cantelon, Ney, Maffeo, Planta and Leach is living in the past. I am surprised you missed Stupich and Lovick and Brookbank and how about Moffat. Opps, Moffat actually did everything right. Well, for the last 40 years, I have lived in Nanamo and what is past is past. I plan on living here in the future and that can be changed.
Interesting observation George,to dismiss the past and concentrate only on the future.I guess you are correct-what is past is past,which makes life pretty simple.
Ron, “Perhaps we could begin with some suggestions about specifically which budget items might be cut.” — The greater challenge might be to identify where best to spend, what areas are underfunded — hidden false economies like neglected maintenance that will bite us down the road.
Those interested in municipal taxation issues will want to look at California’s experience after its tax-revolt Proposition 13 that rolled back property taxes, capped them at 1 percent of purchase price, and limited yearly increases to 2 percent. Basing municipal taxation on property market value assessments has all kinds of problems but a lot of people think that Proposition 13 resulted in the disaster that is current California with entire counties declaring bankruptcy.
Here’s an interesting discussion on KPBS public radio San Diego:
http://www.kpbs.org/news/2010/feb/23/impact-californias-biggest-tax-revolt/
A bit that stood out: best funded schools in the US: New Jersey. worst funded schools in the US: California. Highest municipal taxes: New Jersey. Lowest municipal taxes: California.
It might help to clarify if the topic here is along tax revolt lines or a discussion about the City’s spending decisions — right, wrong and neutral — and how it raises its funds.
If the discussion included property based market value assessments I think it would be interesting to look at alternatives. I might have more or less house than the next guy and I might use more or less costly City infrastructure but my share of paying for it all is based on the value of my property… inherent inequities there don’t you think? The California revolt if I understand it right was opposition to citizens tax levels rising dramatically simply because they had stayed in the same house for decades and had no desire to move. The value on paper of their property was penalizing them and even driving people out of their homes because they couldn’t afford the property taxes. Windfall on the property sure but they’d have to leave that market as well, wouldn’t they — or become renters I suppose.
Also, belonging in the discussion at some point is the provincial government program allowing home owners to defer property taxes. The 55+ program has been in place for a number of years but this year they introduced a new one which I thought was kind of innovative. Families with children 18 or under now qualify. The tax owing is cumulative but at a very low interest rate. It’s repaid by the estate or when the house is sold.
http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Tax_Deferment/families_children.htm
For those who might like to work on the area of City Grants and Property Tax Exemptions, here is a full list provided by the city. You may note that gifting amounts to approximately 4.25% of the tax load.
Click to access grants-and-property-tax-exemptions.pdf
We look forward to a review and recommendations from our own citizen’s grant and Exemption Committee.
Jim Talyor’s comment has been removed as it didn’t meet the standard of the blog’s guidelines: be nice; be civil; if you can’t be nice, if you can’t be civil at least be thoughtful.
Big Brother ….. what part of my comment offended?? The Merry-go- round or reference to becoming ill going around in circles??
Just curious.
The 2011 Financial Plan includes a 2% increase for salaries,wages and benefits.Should Council exercise the will to demand and obtain a 0% increase during contract negotiations with the public service union(s),now underway,this would result in an immediate $1M savings to the 2011 budget.This is where the money goes because the professional union negotiators are well equipped to out-negotiate the City staff,who by the way are exposed to a fundamental conflict of interest because increases to their personal salaries and benefit packages are directly related to what the unions receive.
Jim: In order to get your tax cutting ideas in action you either have to convince enough people to complain to Council about the same items (it’s easy for them to deal with such complaints if everyone comes with a different idea), or at least five citizens must be elected who share the same thoughts on the subject. The former can happen any time, but the latter can only happen once every three -soon to be four- years. Crying over spilt milk is easy. Making change is hard.
Ron; Why wouldn’t simply convincing 5 councilors that the tax cutting ideas have merit and hope they mean what they say about holding the line on spending, accomplish the same end? Unless, of course they only lead, where the crowd wants them to go.
Try to get support for cutting funding to the Port Theatre, and the Nanaimo elite will be out in force to shout you down in a NY minute.
The only time any REAL change in fiscal policy will come, is if at the next election enough people who say they want their taxes held down actually get off the couch and get involved. I think there will likely be an appetite for change come next election as enough people are really feeling pinched that they will respond to a ZERO tax increase policy.
In the meantime, researching ways of reducing taxes now, could stand anyone wanting to get elected next time in good stead as it could result in building some solid planks to stand upon.
Convincing five Councillors would be enough. Unfortunately they are not convinced. To convince them would require an outcry louder than that of what you call the Nanaimo elite.
I don’t think you will find any candidate in the next election who supports higher taxes and is not for lower taxes. The problem is that after they are elected they are essentially free of their promises, Staff pulls the scabs from their eyes and they are shown what is needed. This coupled with the fact that they are unencumbered by any durable constraints such as a party to yank their chains means that they are free to browse the field of public opinion and feed where they may without let. This means, of course, that they will wander apart and almost never get together on anything contentious like change. Unless the public are organized -not a trivial task- they are free agents and not public servants.
Ron; Hoping to organize the public, will require some deep pockets,local media advertising is not cheap.
Just sharing Frank’s reply to my query about how I offended …. can anyone here tell me what he is saying??
“Jim — my interest is in broad and lively discussion. I’m doing this more to learn than teach. I’ll be clipping off comments that try to limit the conversation. Preemptively discrediting points yet to be made by associating them with the person’s address for instance will be unacceptable.
Frank”
Since I have no idea what he is saying, in the interest of not re-offending, I will no longer post.
Please remove my name from you contributors list.
Thanks
” The 2011 Financial Plan includes a 2% increase for salaries,wages and benefits ” Is this intended as an offering of a minimum of 2% to the negotiations? We should have a ZERO increase budgeted and when they want more, show them the budget and say we is sorry, but those that pay your wages have been getting zero, zero and zero from their bosses for the last 15 years and now it is time you start so no more for you til 2025. :)
It’s possible that council is contractually bound to an overall average increase of two percent for salaries and benefits if there are employees partway through a multi-year contract calling for salary increases in the years the contract is in effect; eg, if the unionized employees are approaching the end of the first year of a two-year contract which the city has agreed to and signed, then the agreed-upon increase in salaries must be paid. It’s also possible that the city has been notified by the carriers of various benefits plans (dental, extended health, etc.) that premiums will be increased in the coming year, which would mean that the city would be legally bound to pay its portion of the premiums for those benefits, with the balance deductible from the pay of employees, to be forwarded to the same benefit provider. Under those circumstances city council has no option but to meet its legally-contracted obligations.
Just pointing out possibilities.
The 3 year contract with C.U.P.E. expires on 12/31/10,so the 2% in the Financial Plan was included to allow for potential/probable increases negotiated to commence 1/1/11.Non-union staff typically receive the same increase.The labor agreement with the Firefighters was signed earlier this year,so yes you are quite correct that part of the 2% would be for this existing obligation.The R.C.M.P. agreement is a separate matter and I don’t believe the City has any say in wages and benefits and I think it is covered elsewhere in the budget if memory serves.
” Ron; Why wouldn’t simply convincing 5 councilors that the tax cutting ideas have merit and hope they mean what they say about holding the line on spending, accomplish the same end? Unless, of course they only lead, where the crowd wants them to go.”
Convice those 5 council members that any increase approved will result in ALL NINE being removed in the next election might just rattle a few heads in our council chambers, but then I can’t even get the folks that post here to agree to that, so how the heck can any of us expect anybody to convince five out of nine people that think they are untouchable?
Someone needs to call their bluff.
I believe that Wayne’s interpretation of the union contract situation is correct. How we divine the sum to put into a new contract time period is unknown. We are coming off what I believe was a 3.5% set up which has certainly in the last couple of years whipped the sox off most private employees -not to mention the benefits. Remember we have 12 professionals acting on behalf of staff, not to mention the Hay system. We only have 9 Councillors and I don’t believe that they have any system for evaluating pay in the private sector.
And of course you are right. Politicians don’t necessarily want to lead, but they do want to be in front of a crowd. That is what democracy is supposed to be all about. The problem is we have a crowd deficit here.
Here is something of interest regarding the 2010 round of collective bargaining in BC’s public sector –
– found at http://www.aved.gov.bc.ca/psec/bargaining2010
“British Columbia’s Public Sector Bargaining Mandate 2010 –
The impact of the global financial situation on the Government’s finances means that there will be no money for compensation increases in the 2010 round of collective bargaining. Government’s priority is to protect core services. Holding the line on wage increases means there is more funding available for health care, education and other vital services.
The Province established Mandate 2010 to guide public sector employers and employers’ associations in their bargaining.
The goal of Mandate 2010 is to achieve voluntarily-negotiated collective agreements in the public sector that will continue to support the Province in delivering public services in a cost-effective and financially prudent manner.
Mandate 2010 directs negotiators to develop bargaining plans that do not call for wage increases, but allow flexibility. Generally speaking, Mandate 2010 provides for:
A two-year term
No net increases in total compensation costs
Compensation trade-offs – savings found through (mutually-agreed) changes in collective agreements may be used to fund compensation increase
There are approximately 310,000 unionized workers in occupations throughout B.C.’s public sector, the great majority of which have agreements that expire between March 31, 2010 and December 31, 2010. Just over half of B.C.’s public sector employees have now re-negotiated agreements that were set to expire in 2010, including major agreements in the health sector and the public service.”
This really is interesting!Thanks for posting it.Although the bargaining mandate doesn’t specifically mention municipalities,should the City of Nanaimo staff (and approved by Council)try to get additional wages and benefits for the unionized employees and themselves,then all hell should break out.However should they do so,it should make the next municipal election very interesting,to say the least.
Yes, thanks Janet. we should each and individually send this posting
http://www.aved.gov.bc.ca/psec/bargaining2010
to our Mayor and Council. The more they receive, the more they will understand their interest in this subject. Ask your friends to send it in as well.
Ron,we think alike-I have sent it to Mayor & Council +Terry Hartley + Gavin Hamilton.
Wayne and Ron: You’re welcome! And yes, although it doesn’t specifically mention municipalities, a pretty good argument can be made that it is surely relevant. I do believe that one could say that many of us have a “meeting of the minds” about the topic.
Thanks for forwarding it on to City Hall, Wayne. Will do, Ron!
Jim Taylor said on 23 September 2010 at 2pm
“Since I have no idea what he is saying, in the interest of not re-offending, I will no longer post.
Please remove my name from you contributors list.
Thanks
Jim Taylor”
—————————————————-
Jim: I am sorry to learn this. This article that you contributed on Sept. 21st has had 34 responses! Look forward to reading what you have to say in the future. :)
– Janet