Thursday, December 16, 2010

City votes for small tax cut
Heated debate Emotions run high at meeting
(as published by the Daily Gleaner, December 16, 2010)

Fredericton taxpayers will see the city's tax rate drop half a cent in 2011 under a proposed cut approved in principle Wednesday night by city council. In 2010, the tax rate rose 0.85 cents to bring the rate to $1.42 per $100 of assessment. That amounted to a $12.75 increase on a $150,000 house for the year. The proposed rate reduction for 2011 would cut between $7 and $8 on that same $150,000 house.

Tempers frayed during the debate, which ended in a six-five vote in favour of the tax reduction.
Councillors Steven Hicks, Stephen Chase, Scott McConaghy, Tony Whalen and Eric Megarity opposed the tax rate reduction. Councillors Jordan Graham, Marilyn Kerton, Stephen Kelly, Dan Keenan, David Kelly and Mayor Brad Woodside voted in favour of the rate cut.

Chase was annoyed that finance committee chairman Mike O'Brien sprang the discussion of a rate reduction at the 11th hour of budget deliberations. Councillors have been working since September to reduce spending in 2011 and the tax rate reduction would mean finding another $288,000 on top of $1 million that councillors have already come up with through a combination of fee hikes and internal efficiencies.

Although O'Brien did media interviews about reducing the tax rate, it's unclear if he raised the topic at the council table before Wednesday night. Chase brands the move political opportunism rather than sound fiscal management. "We worked really hard as a council to examine services and come up with $1 million in efficiencies. To put that notion on the table without council having an adequate opportunity to determine where it could find a further half cent, I think that was short-sighted on the part of council," Chase said.

"I could do the politically popular thing in supporting a tax rate reduction and I think that's all it is; it's aimed at that," Chase said. "To entertain the idea of a half-cent tax rate cut that has never been factored into any of the figures that we have here tonight, I just think that's very irresponsible to spring that on council tonight."

"You're damn right it's political," said Woodside during the heat of the debate. "In the last election, the biggest issue was taxes ... I have been very frustrated with this budget process. I've brought a lot of things forward and I haven't got a lot of support. "I feel there's a half-cent (rate reduction) in there." Even with the rate reduction, assessments have gone up, so property owners will likely still see their overall tax bill increase, the mayor said.

But O'Brien said the city hasn't done enough to cut deeply into the city budget. "We did have a lot of items presented, but my opinion is that we didn't dig deep enough ... I know inherently we could have done a better job," O'Brien said. "Not only that, the taxpayers have made it clear to me that they would appreciate that we would find it in ourselves to give some kind of tax relief."

Other councillors agreed. Graham suggested the city has too big of a financial security blanket. He made a number of attempts throughout the budget process to slash even more from program spending. Stephen Kelly said property owners are seeing property taxes as becoming more challenging year over year as assessments rise and he's heard from taxpayers that they want rate reductions.

"They're looking for some leadership on a tax burden plateau," Stephen Kelly said. "We were able to come up with $1 million in savings. I don't see one dime of that coming back to taxpayers."

Keenan said the city should do more to cut the tax bill and not enough work has been done to slash the budget. "There's a certain number of people around this table who won't vote for it (the rate reduction) because they consistently voted for salary increases that are unsustainable (like) the management increase that I would not have supported. They have consistently voted to increase spending," Keenan said.

He accused councillors opposed to the rate reduction of trying to orchestrate the budget to a zero per cent increase. "Who orchestrated that?" Chase said. "There were people sitting here writing down numbers the whole time," Keenan said. "I'm saying we never set a guideline of zero ... That's my point."

Hicks said the city has to be realistic. While he'd like to see a rate reduction, he fears there are even tougher budget years ahead where the city may have to look at big service reductions even with the rate holding steady. "The toughest years are still ahead of us," Hicks said.

Whalen said the city dodged a bullet this year and to reduce the rate next year will mean the city will likely have to turn around and increase the rate again or cut services. "We've taken several weeks to identify $300,000 plus in cuts and now we have a motion to reduce the tax rate, which means we have to find $288,000 ... I just feel a bit like we're pushed into a corner in a real short amount of time," Whalen said.

McConaghy said federal and provincial governments have cut taxes and that's what has left both levels of government with huge budget deficits. McConaghy also opposed the mayor's solution to try to find budget savings by cutting the subdivision land account by an amount equivalent to the $288,000 needed to effect the tax rate reduction.

Woodside presented a second motion that passed six to five with O'Brien breaking the tie vote to chop the subdivision land account by that amount.

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