Otto von Bismarck, the first chancellor of Germany, once said, “Politics is the art of the possible,” which is cutely aspirational and sounds almost Kennedy-esque, though Bismarck said it nearly a full century before JFK told people, “Ask not what your country can do for you…”
I mention this because “the art of the possible” is easier for some governments than it is for others.
This Wednesday, our city council will affirm the 2023 budget passed in December 2021, and there will be a lot of pressure to shave off the proposed 4.96 per cent levy increase in the name of affordability. But shaving is always easier said than done, and some members of council are also teasing the possibility of creating new levies to raise needed funds for mental health care and homelessness too.
This push-pull between needs and affordability has been the story during just about every budget meeting over the last few years. It was my hope that we could have turned last year’s elections into one big conversation about the way we fund cities and the yawning gap between the art of the possible and the coalition of the willing, but it was not meant to be.
On Wednesday, the focus will be on this number, 4.96 per cent. Imbued in it is the populist determination that Guelph is an affordable place to live or not because it’s two per cent higher than the usual two to three per cent levy increase that we always bemoan but begrudgingly accept.
Having said that, one number does not tell the whole story.
Consider this, a report from Statistics Canada in 2003 noted that, on average, Canadians paid 2.9 per cent of their total tax bill to property taxes compared to the 21.3 per cent they paid in income taxes. The median annual family income in Canada in 2003 was $56,000.
In 2010, the right-leaning Fraser Institute looked at the inflated average family income of just over $72,000, when their total tax burden was nearly $9,600. In this study, property taxes accounted for 11.5 per cent of the total amount of taxes that family paid compared to 19.6 per cent in income tax, and 15.2 per cent in sales tax.
At this point, I feel compelled to remind you that the municipal government is the only one of the three levels of government that is legally barred from running a deficit. They control a relatively small portion of your tax bill – one, single, solitary lever – but they’re required by provincial legislation to be the most fiscally prudent.
Simultaneously, these other levels of government are downloading upon the municipalities, sometimes purposefully, but often its because of neglect now.
Mayor Cam Guthrie’s recently discussed idea for a levy to tackle homelessness and mental health is illustrative of this neglect because despite the recent flurry of announcements from the provincial government, they’ve announced nothing to tackle these issues.
Meanwhile, Bill 23 and the like put an increased burden on cities by undermining their ability to collect various fees like development charges, and all in the name of building housing that will supposedly alleviate the problem. The changes won’t fix anything though because these houses will go on the overly inflated and unaffordable housing market.
In the end, they will have no impact on those in the greatest need because no one living out of a shopping cart is going to suddenly be able to buy a home just because there are 18,000 more of them available.
But the provincial government is not the only interest taking part in downloading on the city. There was the recent announcement that Alectra is forwarding the responsibility for collecting water fees to city hall, which will require hundreds of thousands of dollars in capital investments to make the switch.
I know that when Guelph Hydro merged with Alectra we were promised efficiencies, but I guess we mistakenly thought those efficiencies would be for the ratepayer.
That brings us to the University of Guelph, who has been passively downloading costs onto the city for years, most notably with the cost of ferrying students around town. Now, every U of G student does pay for the privilege, but it’s a premium; a student Upass is about the equivalent cost of two monthly adult bus passes, but they get to use it for four.
The more notable downloading now though is housing. This past fall, the U of G welcomed hundreds of new students on top of their usual level of enrollment, and they did so while not being able to guarantee these new students a place to live on campus.
It’s been about 10 years since the U of G opened any new student housing and that was West Residence, which houses 110 upper-year students plus students with families. Hardly enough when you consider that the U of G accepted 1,200 more students than they had room for in 2022.
It’s also hardly enough when you consider that the University of Guelph does not pay property taxes. They make payments in lieu of taxes, the so-called “heads-in-beds levy," and it hasn’t been raised in 40 years. Imagine paying a property tax of $75 for every person living in your house. That’s what the U of G does. Times 25,000.
Now all of these things are more complicated that I’m indicating here, and that’s the point. To focus on this number 4.96 per cent is to only tell part of the story, and a very small part at that. Yet, it’s the part we focus on so completely that we ignore the fact that our city is getting squeezed from all directions.
At a local level, “the art of the possible” is extremely limited because everyone around is saying “Ask not what we can pay for, but what we can make the municipal government pay for instead.” It’s not catchy, but its true.
