Friday, May 23, 2008

Aquatics Centre Funding

GPconservative has a post looking at how the city is paying for the Aquatics Centre and the additional money that council dedicated towards paying for it.

He did miss the fact that a chunk of the $2.9m in extra money is actually coming from the new construction in the city, it's not all from the provincial reduction in Education property taxes.

Other than that I think over all he's pretty accurate on his post. The mill rates vs. tax rate thing can be confusing (I've looked at mill rate before ) but the essence of what he says is correct: The province is collecting less tax from property in Grande Prairie and the city is "capturing" it or "moving in to the space vacated by the province".

This isn't the first time this has happened the province has slowly been moving out the property tax area for sometime and in the last couple of years I've voted to support the City taking that space each time it's come available. This is a major plank in the AUMA's argument for funding for cities.... the province has lots of revenue sources (income tax, user fees, royalties), as municipalities we only have property taxes (and to a limited extent user fees and grants). So unless we get additional taxing powers (a whole other discussion) then we need all the room we can get in the property tax area.

The only thing that I'd suggest GPconservative might be off base about is that that it's an "Aquatics Centre Tax". The money is going towards the Aquatics centre, that's true. But it could have gone towards anything... all the way from lowing the tax increase (as you pointed out) to additional spending on some other project or service. So that's a matter of perception really and I can understand that some people will see it that way.

How ever you see it I firmly believe that it was the right decision.

Council choose to apply it towards some of the money we had anticipated borrowing, essentially increasing our "down payment" and decreasing the amount of the "mortgage" on the Aquatics Centre.

As you know, the more you put down up front, the less you pay in interest over time. The DHT article kind of mentions this " ...borrowing will decrease by $8.8 million and reduce debt services charges by $672,000 in 2010." but doesn't get the real scope of the savings... I'm pretty sure it actually saves $672,000 ANNUALLY starting in 2010. Over the term of the borrowing that equals a lot of tax payer dollars that won't be spend on interest payments!

So, yes this additional money is going towards the Aquatics Centre and yes it could have gone towards reducing the tax increase. But first off it wasn't planned that way a year ago, second the home owner will not pay more than the 9.7% increase council approved back in November and finally it will save tax payers over the long term.

I'm comfortable standing behind the decision.


gpconservative said...

Thanks for this Bill.You rock!!

I hate disagreeing with you but because it is going "in full" to the Aquatics Centre for the next 3 years than I'm not sure how it can be called anything else.
And I see the point that it's saving money. But I would ask if it's the right decision now, why was it not the right decision during budget time last year?

Bill Given said...

You asked: "But I would ask if it's the right decision now, why was it not the right decision during budget time last year?"

Two reasons why it wasn't done at budget last fall...

1. the province doesn't release the education property tax numbers until the spring. (We didn't know of the reduction until recently)


2. the growth, or supplementary assessment, is stuff that was built (or improved) between the time when we set the budget (fall) and when we set the mill rate (spring)

We couldn't have known either. Staff do make an estimate of the Supplementary Assessment but they are conservative in that prediction, lest we end up with not enough revenue to cover the budget. And the provincial government is, well, the provincial government.


gpconservative said...

Yes I understand how estimation is necessary.
The point I was trying to make was that Council could have increased property taxes by an additional 1,2,or 3% during budget talks last year. And used the extra taxes collected to downpay our Aquatics centre mortgage, just as it is now.
At the time I imagine council did not think it was a very good decision otherwise thats what would have happened.

I feel that the only difference now is how its reported. It does not show up as a line item or as an increase over and above the 9.7% this year, but indeed it works out to an increase in City taxes. It's just hidden because it stems from an increase in the cities cut of property taxes.
(and provincial taxes decreased by the same ammount)


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