Federal Budget Benefits Municipalities

A couple of days ago, Finance Minister Jim Flaherty released his third budget. This is something unheard of for a minority government being able to have this many budgets without being defeated. In many cases, they’re doing a good job and while most Canadians don’t want an election, they seem comfortable with our MP’s in this minority situation.

Some of the big highlights for towns and cities are as follows:

• Strengthening Public Transit

  Public transit plays an important role in easing traffic congestion in urban areas and contributing to cleaner air and lower greenhouse gas emissions. In Budget 2006, the Government set aside $1.3 billion in support of public transit infrastructure and introduced a new tax credit for public transit passes.

  Budget 2008 sets aside up to $500 million in 2007–08 to be paid into a third-party trust, allocated on a provincial-territorial per capita basis, for public transit infrastructure. Funding will be paid into the trust, once legislation has been passed, for only those beneficiaries that have made public commitments before March 31, 2008 to undertake investments in public transit. The beneficiaries of the trust will have the flexibility to draw down the funding as they require over the next two years. They are encouraged to report publicly on the expenditures financed and outcomes achieved.

  The trust will be used for specific projects of capital infrastructure such as rapid transit, rail, transit buses, and high occupancy vehicle and bicycle lanes.

This means more federal money will be available to municipalities to invest in public transit improvements. What the GTA desperately needs is a seemless transit system that will allow a Milton resident who works in Brampton or Hamilton to be able to take a bus from here to there with minimal difficulty. As it stands right now, that person would have to drive.

• Permanent Gas Tax Fund

  The Government recognizes the need for long-term funding for infrastructure to help drive economic growth and productivity, to achieve our environmental goals, and to build strong, competitive communities.

  To this end, in Budget 2007 the Government announced the historic seven-year $33-billion Building Canada Plan. More than half of this investment under the plan will flow to municipalities. For example, municipalities can access the $8.8-billion Building Canada Fund and benefit from the increase from 57.14 per cent to 100 per cent in the rebate of the Goods and Services Tax they pay.

  The largest component of the Building Canada plan is the Gas Tax Fund, which provides municipalities with funding for priorities such as public transit, water and wastewater infrastructure, and local roads. Under the plan, the Gas Tax Fund will grow and reach $2 billion by 2009–10 and stay at that level through 2013–14.

  In response to ongoing requests for stable, long-term funding, the Government announces that the Gas Tax Fund will be extended at $2 billion per year beyond 2013–14 and become a permanent measure. This will allow all municipalities, both large and small, to better plan and finance their long-term infrastructure needs. A permanent $2-billion-per-year Gas Tax Fund will help put in place the world-class infrastructure Canada needs.

With Milton being the fastest growing municipality in Canada, this should benefit us as we wait patiently (or impatiently as it may be) for our roads to be developed to accommodate its growing numbers. The town of Milton is now over 70,000 and counting and we need the Region of Halton to keep up with the growth and ensure minimal delays while widening roads in the area like this summers plan for Derry Road to Trafalgar. The Region of Halton and the Town of Milton cannot keep relying on Mattamy Homes to bail them out.

These are just a couple of items that I pulled from the budget. All in all, it is a pretty sound plan for the coming years. Using a good portion of the surplus to pay down the national debt, make these kinds of investments and reductions in taxes like the GST cut, it looks like Canada can weather some of the impact of the US economy with minimal effects.

Thanks for reading and feel free to comment here or send me an email at mike@mikecluett.ca

More talk about the Milton Tax Increase

Yes, its been awhile since my last post and I do apologize for neglecting my blog for the last couple of months. In this period of time I have changed employers and my time has been devoted to getting ramped up with my new career.

My previous employer was a smaller leasing company who fell victim to the short term credit crunch and the asset backed commercial paper market. Back in August and September when it really hit the fan, the available cash from our securitization partners ran short leaving our company in a tough situation and unable to process deals.

That being said, it didn’t take long before the doors closed and many of the 2o or so employees were left looking for other employment.

I’m still in the leasing business working for Irwin Commercial Finance with our branch office based out downtown Toronto. This means more commuting to the downtown core courtesy of GO Transit from Milton, so I’m getting a deeper understanding about public transit in our area.

At this point, Milton doesn’t have all day GO Train service to Toronto with only a few trains in the morning and a few in the evening. Many of the commuters that use the

Milton station come from outside the area in Cambridge, Guelph and northern parts of Oakville and Burlington. The provincial government recently announced a large investment in GO Train services of $100 million dollars but unfortunately none of those dollars have made it to Milton.

Speaking of public transit in Milton, the recent budget brought down by council included ANOTHER huge chunk of cash to go towards buses in town. Also, the town released a report that ridership on Milton transit had increased. You can find the article from the Champion here. On the surface that sounds great. But when you look deeper into the numbers, it isn’t as good as it sounds.

The main reason ridership numbers are up is because of several programs with private sector companies sponsoring free rides. So when its free, people use it more and when people have to pay for it, the numbers decrease immensely.

The report mentioned that ridership increased 63% from 2006 levels. Again, on the surface those numbers sound great, but you don’t get the full picture as many times during 2007 there were extended free fare programs courtesy of a number of companies including Mattamy Homes, Fieldgate Properties, the Milton 150th Anniversary Celebrations, and for such events as the Downtown Street Party. You also have to look at the population levels from 2006 to 2007 and you will find it increased dramatically during this period of time. Unofficially, now Milton is over the 70,000 mark and heading upwards on a daily basis.

What is not mentioned is that there would have been minimal increases in ridership if there wasn’t a fare free program. On the surface it looks like ridership in public transit is up…but you have to carefully look at the numbers. It’s a good first step, but from a business standpoint it doesn’t justify an excessive increase in funding for 2008 over 2007, and that is what town council did for this years budget.

Based on these facts it seems financially wrong to make further cash investments in a program little people are using. Those who read this blog and who have spoken with me during the last municipal campaign know that I am a cautious supporter of public transit.

As our town grows there will be a further need fore more buses and more routes in town for people to get around. At this point, what we had sufficed and until there was any changes in demand, (ie: non-artificially boosted numbers) then the town can look at making more of an investment in transit.

A good friend of mine once said to me “public transit is a slippery slope that can turn into a cash cow for municipalities and in turn will cause increased taxes.” He was right on the money with that statement. Last year council spent millions of dollars on new buses that realistically will run mostly empty unless theres a special free ride promotion and now in 2008 even further investment.

In a letter to the Milton Canadian Champion, former town councillor John Challinor made a few comments that is worth repeating. You can find his letter to the editor here.

Only council is to blame for town’s tax increase

Published on Feb 19, 2008

I read with interest the letter to the editor from Marshall Horner that appeared in the January 25 Champion entitled ‘Town not to blame for tax hike.’

Balderdash. Contrary to what Horner wrote, Milton council — and only Milton council — is responsible for approving a 6.6 percent tax increase this year.

While I’m disappointed with the Region of Halton these days, the Region had nothing to do with it.

Whoever misled Horner on this and the mountain of other misinformation that appeared in his missive should be ashamed of themselves.

What I found particularly odious was the notion that had previous councils routinely approved annual budgets of at least 4.5 percent, a 6.6 percent budget this year wouldn’t have been necessary.

Had that happened, we would have one of the highest residential property tax rates in the GTA, and one of the lowest rates of job-creating industrial development. Few could afford to live or invest here.

When I left council in November 2006, the Town’s financial position was among the strongest of any municipality in Canada. It still is.

Budget-setting is a delicate dance. This council needs to establish realistic funding priorities quickly — and implement them. Its embarrassing performance during the 2008 deliberations confirms there is no consensus on where to spend.

Council got off on the wrong foot early in 2007, which led to the position it finds itself in today.

The 20 per cent pay hike it voted itself, the unnecessary parking lot expenditure at Milton Fair Grounds and an over-zealous investment in public transit all figure in the tax increase we’re experiencing today.

In closing, I thought long and hard before writing this letter because I no longer have much taste for publicly correcting individuals or members of council who clearly demonstrate they don’t understand municipal finance. I also still enjoy a number of friendships around the council table.

That said, I will gladly sit down with Horner, any other taxpayer in Milton or any member of council to review the 2008 budget and past budgets to show how council got here — and how it can get out without further fiscally harassing new homeowners, seniors and others on fixed incomes and those who create jobs in this community, like our hard-hit manufacturers.

JOHN CHALLINOR II, GOWLAND CRESCENT