There are many ways of measuring the effect of property taxes on the residents of a municipality. All too often, news media use the budget bottom line, dollars, as their sole measure and feel impelled to describe it as a tax increase, ignoring population change, inflation and debt.
Currently, the City of Ottawa (Ontario Canada) defines a constant municipal tax as one which nominally results in the same number of dollars paid by the same taxpayers. When the value of all properties rises the same amount, taxes do not change. When the number of assessable properties increases, total dollar taxes go up in proportion of the assessed value of new properties to existing ones. However, all changes to existing properties that require a building permit are treated as improvements (for example, repairs following a fire), allowing a small increase in 'constant' property taxes. This formula is not provincially mandated, but nonetheless is commonly agreed upon by most Ontario municipalities. It allows 'constant' taxes to go up at a slightly greater rate than that of population. But, there is no allowance for inflation or change in debt in this model.
Longer ago than I care to remember, I chaired the Recreation & Parks Board of the Township of Cumberland. When it came to establishing a baseline for the R&P budget for the Township, I made the following proposal: that the best measure of municipal 'constant tax' is the portion of tax of the total income of all residents of the township. The reason: even though municipal taxes are based upon the capital value of property, people in fact pay taxes out of income, not capital. This page applies that philosophy to the amalgamated City of Ottawa.
In Canada, Revenue Canada provided the aggregate taxable income of all residents reporting from a postal address. (In Cumberland's case, these were then half of Orleans, Cumberland (village), Sarsfield, Navan and Vars.) This measure was established by an agency distinct and separate from the municipality. All residents of Canadian municipalities file an income tax return in order to obtain tax credits. So, it took into account local population changes, local employment changes, and local inflation. Today, Statistics Canada provides data that is easier to access, so I use it here.
Here are the numbers for the amalgamated City of Ottawa:
| year | population | per capita income | total
taxes ($,000) | net debt | debt change | effective taxation | real tax change | Mayor | ||
|---|---|---|---|---|---|---|---|---|---|---|
| 2000 | 785907 | 29200 | 745774 | 424940 | pre-amalgamation | |||||
| 2001 | 796800 | +1.8% | 30600 | +4.79% | 913696 | 125574 | -299366 | -34.2% | -40.8% | Bob Chiarelli |
| 2002 | 814195 | +2.0 | 31100 | +1.6 | 956480 | 29350 | -96224 | +40.0 | +36.4 | " |
| 2003 | 828461 | +1.5 | 31500 | +1.3 | 976578 | 186907 | 157557 | +31.8 | +29.0 | " |
| 2004 | 839566 | +1.6 | 32400 | +2.9 | 1059355 | 215682 | 28775 | -4.1 | -8.5 | " |
| 2005 | 854333 | +1.5 | 33500 | +3.4 | 1099196 | 357224 | 141542 | +14.0 | +9.1 | " |
| 2006 | 865554 | +1.3 | 34700 | +3.6 | 1131536 | 358900 | 1676 | -8.7 | -13.6 | " |
| 10.1% reduction over 6 years | ||||||||||
| 2007 | 877300 | +1.3 | 36560 | +5.4 | 1143891 | 367618 | 8718 | +1.7 | -5.0 | Larry O'Brien |
| 2008 | 888850 | +1.2 | 37940 | +3.8 | 1229794 | 453304 | 85686 | +14.1 | +9.2 | " |
| 2009 | 898150 | +1.1 | 38570 | +1.7 | 1286044 | 900255 | 446951 | +31.7 | +29.0 | " |
| 2010 | 908389 | +1.1 | 39110 | +1.4 | 1358107 | 1051655 | 151400 | -12.9 | -15.4 | acting mayors |
| 13.2% increase over 4 years | ||||||||||
| 2011 | 917550 | +1.0 | 40140 | +2.6 | 1407982 | 1097918 | 46263 | -3.7 | -7.3 | Jim Watson |
| 2012 | 927118 | +1.0 | 41110 | +2.4 | 1462797 | 1180175 | 82257 | +6.2 | +2.9 | " |
| 2013 | 935073 | +0.9 | 41690 | +1.4 | 1511051 | 1263223 | 83048 | +3.2 | +0.9 | " |
| 2014 | 943258 | +0.9 | 42010 | +0.8 | 1568444 | 1445866 | 182643 | +9.9 | +8.2 | " |
| 2015 | 951727 | +0.9 | 43140 | +2.7 | 1626544 | 1564474 | 118608 | -0.3 | -4.0 | " |
| 2016 | 960756 | +0.9 | 43770 | +1.5 | 1653541 | 1833017 | 268543 | +10.1 | +7.8 | " |
| 2017 | 968580 | +0.9 | 45360 | +3.6 | 1703630 | 2219308 | 386291 | +8.7 | +4.1 | " |
| 2018 | 979173 | +1.2 | 46500 | +2.5 | 1776722 | 2244786 | 25460 | -13.8 | -17.5 | " |
| 2019 | 991429 | +1.4 | 47650 | +2.5 | 1864760 | 2493989 | 249203 | +17.3 | +13.5 | " |
| 2020 | 1006210 | +1.6 | 50570 | +6.1 | 1944683 | 2371657 | -122332 | -13.8 | -21.5 | " |
| 10.3% reduction over 10 years | ||||||||||
| 2021 | 1022604 | +2.0 | 52390 | +1.0 | 2022302 | 2595301 | 223644 | +23.2 | 17.7 | " |
| 2022 | 1046443 | 2.9 | 2137217 | 2749732 | 154431 | +2.0 | " | |||
| 2023 | 1083550 | Mark Sutcliffe | ||||||||
In summary: until 2007 the amalgamated city was maintaining its financial health and reducing effective taxation, seeming to fulfill the promise that amalgamation would bring efficiencies compared to a dozen separate municipalities. What's more, the province of Ontario downloaded additional expenses to municipalities during this period by increasingly underfunding provincially-mandated programs. For example, in 2001 provincial grants funded almost 31% of social housing expenditures; by 2005, this had decreased to 24%. The total funding gap between provincially mandated programs and provincial funding increased by about $16 million by 2006, equivalent to 1.7% in taxes. The amalgamated city was actually able to reduce real taxation under its control by almost 12% over these 6 years.
That improvement ceased dramatically in 2008-9 as an inexperienced mayor lost control of council and debt skyrocketed. Since the return of the current mayor (a pre-amalgamation councillor for 6 years and mayor for 3, who has compared controlling council to "herding cats"!), real taxation has decreased on average by 1%. The wild fluctuations starting in 2018 are due to planned bills for the new east-west LRT system being delayed by a year due to construction delays and to unexpected (and unwanted!) penalties for unavailability of the system; these fluctuations will continue with lawsuits related to the east-west system and construction of the southbound system.
John Sankey
other notes on community matters
Notes:
- "Total taxes available for municipal purposes" in the Consolidated Financial
Statements for the city excludes education which is not under City control, but includes fire and
police costs, transit subsidies and special levies. These statements are currently being published
more than a year late.
- Effective taxation equals total taxes plus the change in "Net debt end of year". For
2000-2005, this debt was reported as "Total municipal position", for 2006-2007 as "Net financial
liabilities". ("Long term debt" includes solely capital expenditures; "end of year" also includes
liabilities for employee pensions etc.)
- Populations are estimates by the City planning department as of 31 December
the previous year; an official census is held only every 5 years.
- The per-capita income was from Statistics Canada Median Total Income for
Ottawa-Gatineau (Ontario Part). They have now changed their definitions and are 3 years late.
- Percentages are rounded to the nearest 0.1%. Remember that changes compound:
a 10% increase followed by another 10% increase is 1.1*1.1=1.21, a 21% overall increase.