Capping property taxes short-sighted

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Experience has conditioned St. Albert homeowners to have their wallets handy when property tax notices are mailed in the spring. Over the past five years the municipal portion of tax bills has increased by 2.9, 5.1, 5.9, 6.4 per cent and three per cent. That’s all added to St. Albert’s status as one of Canada’s most heavily taxed cities, where a homeowner’s municipal tax bill averaged $3,622 last year, according to a recent City of Edmonton study.

With that dubious distinction in mind, most St. Albert homeowners would likely welcome Coun. Len Bracko’s failed attempt to set a 1.5 per cent ceiling on spending increases in 2011 and 2012. While such a show of fiscal restraint is certainly welcome, and in many cases overdue, a spending cap is economically short sighted and makes for political folly.

Coun. James Burrows probably said it best when he said he couldn’t support the spending cap given the current economic uncertainty. He preferred “patience” over a move that could box council in. It’s hard to say whether a spending cap of 1.5 per cent will be unrealistic in two years since so much depends on what happens to the economy. If the landscape improves, the city can expect to pay more for everything from labour to gasoline for city vehicles to lights at city hall. The 1.5 per cent ceiling might not cover the city’s needs, putting future councils in a tough financial spot. Alternatively, if the economy continues to flatline, a 1.5 per cent spending increase could be too high. That was arguably the case for budget 2010, approved in December, which calls for a 2.9 per cent tax increase in a climate of null growth and when the year-over-year Consumer Price Index was in the negative.

Had councillors endorsed a 1.5 per cent ceiling for 2011 and 2012, they would have been guilty of making spending decisions for future councils, effectively reversing a resolution made last year to do away with multi-year budgeting. That’s not a road council needs to revisit. While longer-term planning can lead to more efficient spending, the recession proved the process is flawed because no one has a crystal ball that can accurately predict the economy two and three years out. The initial 2009/11 budget called for tax increases of 8.39, 8.42 and 7.84 — eye-popping figures that are now out of touch with today’s reality.

Extending the cap into another council term circumvents the public’s main opportunity to influence city priorities through the councillors they elect for a three-year mandate. Tying another council’s hands fails to respect this process, and has the potential for sticky repercussions. Though no council is technically bound by the decisions of another, it would be politically dangerous to do away with a 1.5 per cent spending cap, especially if it meant going to taxpayers for more. Fingers would point at city hall along with cries of broken promises, regardless of who initially made the pledge and whether they still held a council seat.

For all of its short-sightedness, Bracko is right to point out St. Albert’s tax structure is unsustainable and that spending is out of line with what’s happening in the current economy. It’s also refreshing to hear a councillor concede there’s room to cut spending, even if he provided no specifics. However, it’s unfortunate those realizations only came after council approved a 2.9 per cent tax hike, a spending increase Bracko himself supported after voting against a motion to cut spending by another 0.75 percentage points. It doesn’t take a crystal ball to realize promises of spending restraint are meaningless if they’re not backed up with action.

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St. Albert Gazette

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