Property taxes

[GraphicMatt]

What were commercial tax rates pre-amalgamation? Did North York, Scarborough, Etobicoke, etc. set their own tax rates?

I sort of get why downtown would have slightly higher commercial tax rates because theoretically there are other benefits to setting up shop there. But when you're comparing the outer 416 to the 905, the only differentiator you've got is taxes.

 

[Glen]

What were commercial tax rates pre-amalgamation? Did North York, Scarborough, Etobicoke, etc. set their own tax rates?

I sort of get why downtown would have slightly higher commercial tax rates because theoretically there are other benefits to setting up shop there. But when you're comparing the outer 416 to the 905, the only differentiator you've got is taxes.

Good question, but the answer is not so straight forward. In all municipalities across the province, the the previous Municipal Act mandated that the residential tax rate be 85% of the non residential. So, for example, if the mill rate was .5% for residential the rate for non residential would be .58824%. The new MA regulates that the ratios between residential and commercial/industrial range from 1:.8 to 1:1.1 (IOW less than the residential rate).

The problem in Toronto, and elsewhere in the province was that the assessments that the mill rate was applied to were not uptodate. Some properties had assessments going back to 1940. The city is prevent by law from having different mill rates within a property class, so an old bout very valuable mansion in Rosedale might have been assessed in 1940 for $10,000 while a new modest home might have had an assessment of $150,000. The city had no choice but to apply the same tax (mill) rate to both properties. Even though the Rosedale home might have had an actual market value of $1,000,000 it would pay only 6.7% as much municipal property tax as the modest newer home.

Because there were so many old assessments frozen in Toronto, and elsewhere but to a lesser extent, the mill rate needed to be high in order to generate sufficient revenue. Now, and this applies for all property classes, as time wore on newer properties were being increasingly penalized. Eventually the feasibility in Toronto was being put at risk. Especially for commercial properties.

All this happened prior to amalgamation. So newer cities like North York, Scarborough etc. had far less assessment disparities. As such they had mill rates that were lower, so new construction was not as affected.

 

[Glen]

Looking at what I pay for property tax compared to people I know in 905 - I have achieved it. I gueses I should go sent my councillor a campaign donation!

What you pay is not what it cost.

 

[taal]

So with the current plan to fix the ratio between residential and commerical rates
http://www.toronto.ca/finance/tax_policies.htm

Along with the provinces commitment to lower Toronto's (416) commerical education component to the value in the 905 (or equalize the two) by 2015.

Imply that by 2015, Toronto will be more competitive from a commerical tax point of view with the 905 ?

 

[Glen]

So with the current plan to fix the ratio between residential and commerical rates
http://www.toronto.ca/finance/tax_policies.htm

Along with the provinces commitment to lower Toronto's (416) commerical education component to the value in the 905 (or equalize the two) by 2015.

Imply that by 2015, Toronto will be more competitive from a commerical tax point of view with the 905 ?

They will be closer, but not close enough. Recall that the residential rate might go up by 48% by 2014 barring any asset sales or an increase in provincial funding. Taking Toronto's very low mill rate from 2004 and multiplying it by 2.5 may have been similar to the 905 average mill rate. Doing so in 2015 when Toronto's mill rate is set to climb, by budgetary and the shift itself, far more than elsewhere, will keep Toronto uncompetitive. Small business are going to continue to flee.

 

[taal]

They will be closer, but not close enough. Recall that the residential rate might go up by 48% by 2014 barring any asset sales or an increase in provincial funding. Taking Toronto's very low mill rate from 2004 and multiplying it by 2.5 may have been similar to the 905 average mill rate. Doing so in 2015 when Toronto's mill rate is set to climb, by budgetary and the shift itself, far more than elsewhere, will keep Toronto uncompetitive. Small business are going to continue to flee.

Curious, why will the mill rate grow in 2015 ? i.e. the budgetary constraints ?
Other then inflation and some growth (the 905 will face this as well) ?

You seem to be implying that Toronto will need to increase it's in take from property tax (commerical and residential combined) for some reason by 2015, more so the the surrounding regions ?

 

[nfitz]

Recall that the residential rate might go up by 48% by 2014 barring any asset sales or an increase in provincial funding.

If you honestly believe that, then I don't think your qualified to be opning on the subject. That would only happen if many, many, many, many, many unfunded projects suddenly got funded. The whole reason they are unfunded is because there is no money.

I'm not sure what your motive is to spin this in that direction, but whatever it is, the shilling is shameful.

 

[Glen]

If you honestly believe that, then I don't think your qualified to be opning on the subject. That would only happen if many, many, many, many, many unfunded projects suddenly got funded. The whole reason they are unfunded is because there is no money.

I'm not sure what your motive is to spin this in that direction, but whatever it is, the shilling is shameful.

The projections are from city staff.

http://www.torontosun.com/news/torontoandgta/2010/04/07/13502391.html

Torontonians are facing average annual property tax increases of more than 10% for four years in a row unless the city can find new revenue sources.

Without asset sales or a significant increase in provincial funding, the tax bill could leap by about 12.5% in 2011, 11% in 2012, 9.75% in 2013 and 8.25% in 2014, city staff told the executive committee Wednesday.

The committee approved a much more modest 2.9% increase on residential property taxes for this year, adding $67.69 to the average home assessed at $407,374 and bringing the 2010 tax bill to $2,402.

Mayor David Miller said he feels confident the Dalton McGuinty government will follow through with election promises to upload 50% of the TTC’s operating costs, despite its recent decision to delay half the promised funding for Transit City.

“My confidence in the government was shaken by their position on Transit City,†Miller said. “Am I concerned (about TTC operating funding)? Yes. But I mean they’ve made a clear commitment repeatedly to negotiate this ... I believe on this one that they’ll honour their commitment and it will put this city in good shape for a long time.â€

Toronto is also looking for the province to upload social housing costs, and needs the federal government to give it one cent of the GST.

None of the items requested by the city are in the provincial budget.

While the province has agreed to talks with Toronto regarding its TTC operating budget, there is no deadline for an agreement.

McGuinty has said he does not have the money right now.

Councillor Doug Holyday said the city is budgeting based on wishful thinking.

“It counts on too many things that are not likely to happen,†he said.

Without new funding sources or asset sales, the following four years of tax increases could boost the average Toronto homeowner’s bill to more than $3,500 by 2014.

However, Toronto’s residential property taxes still tend to be lower than those in neighbouring communities.

Oakville residents, for instance, paid an average of $3,461 in property taxes compared with Toronto’s $2,334 in 2009. Mississauga homeowners forked over $2,559 and Oshawa ratepayers paid $3,314 on average in 2009.

PS niftz, in all honestly you do not even understand the concept of efficiency, all you do is champion Miller. I think that if anyone here at UT is a shill it is you.

 

[taal]

How did this happen though? Is it large scale capital projects that need to be paid for in the next 5 years or just yearly expenses i.e. TTC / police ... that later wouldn't make much sense as there's no reason why these would increase by 10%+ over the next 5 years.

But then again, the report suggests the rates need to increase by 10% every year - so in 5 years we're paying say 40% more - that has to be for yearly expenses ... but what exactly ?


Back to taxes for a second - in the example about the average residential rate would increase to 3500 - which would make Toronto just about the most expensive in terms of residential property tax. But that doesn't mention what would happen to the commerical rates - is this including the re-balancing that is to take place over the next 5 years?

 

[Glen]

How did this happen though? Is it large scale capital projects that need to be paid for in the next 5 years or just yearly expenses i.e. TTC / police ... that later wouldn't make much sense as there's no reason why these would increase by 10%+ over the next 5 years.

But then again, the report suggests the rates need to increase by 10% every year - so in 5 years we're paying say 40% more - that has to be for yearly expenses ... but what exactly ?

It is projected because the city has been using reserves, deferring other payments and getting bailouts from the province. But now the cupboards are bare. No more rabbits to pull from hats.

Back to taxes for a second - in the example about the average residential rate would increase to 3500 - which would make Toronto just about the most expensive in terms of residential property tax. But that doesn't mention what would happen to the commerical rates - is this including the re-balancing that is to take place over the next 5 years?

I haven't bothered to look at how the figure was calculated. I do think though that Mr. Pennachetti's warning was more along the lines of, current spending commitments are going to require revenue growth equivalent to 10% per year of the property tax revenue.

 

[Glen]

Toronto's 343 million dollar hole for 2010 was filled with by these ( Unsustainable Strategies)

Prior Year Surplus 245 million
Savings from Garbage strike 31 million
Reserve draws 67 million

 

[nfitz]

The projections are from city staff.

http://www.torontosun.com/news/torontoandgta/2010/04/07/13502391.html

Oh good grief ... that's the Sun. We discussed this last April, how that was completely out of context, and those numbers weren't realistic. You can't use a piece of biased trash like that to demonstrate anything. Reference the staff report.

PS niftz, in all honestly you do not even understand the concept of efficiency, all you do is champion Miller. I think that if anyone here at UT is a shill it is you.

Not sure what efficiency has do do with this discussion. It was quite clear in an earlier discussion you had no comprehension of what efficency meant.

I'm not sure why you think I'm shilling for someome who isn't even running ... and I've criticised so much in the past. But with 7 years in power, tax increases much lower than 10%, and a huge budget surplus, one obviously has to be pretty biased to be talking about 50% tax increases. Given that so much of the taxes go to labour costs, it's just not conceivable.

 

[Glen]

Oh good grief ... that's the Sun. We discussed this last April, how that was completely out of context, and those numbers weren't realistic. You can't use a piece of biased trash like that to demonstrate anything. Reference the staff report.

The staff presentation was made orally. There is no official record. If you like though you can read these .....

http://www.toronto.ca/finance/pdf/opbud2010_corporatereport.pdf

It is noted that
unsustainable/one-time strategies used in the 2010 Operating Budget total $343 million,
$108 million less than the $451 million utilized in 2009.

From today's Toronto Star.....
http://www.thestar.com/opinion/edit...--editorial-platform-numbers-don-t-measure-up

Simply put, this city routinely spends more on programs and services than it raises through property taxes and user fees. The result is a nagging annual shortfall that has run in excess of $400 million. A balanced budget has traditionally been achieved through a blend of dubious bookkeeping tricks, raids on Toronto’s dwindling reserves and last-minute bailouts from Queen’s Park. But there is a limit to these options. Fresh injections of provincial money are especially unlikely given Ontario’s own budget woes.

Next year’s municipal shortfall is tentatively pegged at $250 million. In other words, Toronto’s next mayor and council can expect to start their budget deliberations a quarter-billion dollars in the hole. It’s likely to get worse in years to come. Yet candidates persist in ignoring this elephant in the counting room.

Perhaps you would believe Don Drummond......
http://www.thestar.com/news/insight/article/748420--your-day-of-financial-reckoning-is-nigh-toronto

Throughout this past decade, Toronto has depended on a variety of non-sustainable sources of cash, including bailouts from the province and withdrawals from its own reserve accounts, to balance its budget. Put plainly, the city has been running a structural deficit since the start of the decade.

That structural deficit has grown rapidly, from a $72 million gap in 2002 to a $447 million rift last year.

So the $400 million hole for 2010 is hardly a new phenomenon. What has changed, this year, is the likelihood of pulling another rabbit out of the hat to plug it. Toronto has drawn down its reserves to a level much lower than neighbouring jurisdictions.



Meanwhile, the province now has a huge deficit of its own to confront this year. Queen's Park now has 24.7 billion reasons why it is highly unlikely to lend extraordinary help to the city – not just this year, but for the foreseeable future.

This time the city may be on its own to fill the gap. The options are limited: cut spending, monetize assets, or raise more money through a combination of increased property taxes, user fees and new revenue tools.

And because the problem is structural, it will only get worse.

How big could it get? It helps to extrapolate the city's budget out for the decade ahead, drawing upon historical trends and adjusting for known future changes, such as the social services costs that will be transferred from the city to the province. Even if spending growth is trimmed to 5 per cent per annum, but revenues continue to grow at 3 per cent, the $400 million structural deficit for 2010 widens to a $1.2 billion chasm by 2019. Funding a deficit this size would require a 37 per cent property tax hike over current levels. (See chart above.)

You can see the full report BoT report here.

Not sure what efficiency has do do with this discussion. It was quite clear in an earlier discussion you had no comprehension of what efficency meant.

Stop embarrassing yourself. It is you that is delusional, believing that price, regardless of subsidy, is a measure of efficiency.

I'm not sure why you think I'm shilling for someome who isn't even running ... and I've criticised so much in the past. But with 7 years in power, tax increases much lower than 10%, and a huge budget surplus, one obviously has to be pretty biased to be talking about 50% tax increases. Given that so much of the taxes go to labour costs, it's just not conceivable.

The only reason that taxes have increased less than spending is because of the very same measures listed in the above links. As Don Drummond says's though there is little chance that the city can continue to pull rabbits out of its hat.

 

[Admiral Beez]

Every property in Ontario, regardless of class, shares the same assessment date.

My assessment is dated November 21, 2004.

 

[nfitz]

Yet we had the same horror stories years ago as well, and it just didn't bear fruit.

There's no indication that tax rates will have to increase 10% next year. You've provided nothing other than the Toronto Sun to support that claim. There are worse-case assumptions based into that number that are not realistic.

In the meantime, you advocate that we accelerate the program to increase residential taxation so as to decrease commercial taxes. Tell me, what multiplier do you think we should have in Toronto? Miller has promised to drop the multiplier to 2.5 times by 2017. I guess you don't think that this is low enough; and yet you also suggest that perhaps we have a long-term financial problem ... so perhaps we should leave it where it is?