LARRY'S CORNER- Hamilton's Former Mayor Speaks

The Area Rating Debate (part 2)

By Larry Di Ianni
(posted August 14, 2008)

We are going to have a review of this taxation principle over the next several months. Council has agreed to this; and Council has agreed that any implementation will occur after the 2010 municipal election. This means that one of the defining issues in the next election will be the level of taxation being passed on at the municipal level to property owners. A lot is at stake for everyone in this debate whether they be Councillors, or property tax payers.

The staff report has pointed out some basic truths regarding Area Rating (AR) and its current applicability.

The first is that the current model was set up to mirror the municipal boundaries in the former municipalities. It is a fact that the services delivered don’t reflect those former boundaries and they probably never have since amalgamation. The best case in point is fire services in streets adjoining former municipalities. In Ancaster’s border with Hamilton, for example, fire trucks respond if they are close to a fire regardless of the boundary. This taxation principle has always been the amalgamation anomaly of trying to fit a square peg into a round hole, which is what amalgamation, to its critics, did. Just ask “Free Flamborough” that rogue pressure group in that community. Amalgamation was a ‘force-fit’, they would say. So, to try to make some logical sense of the taxation schedule presented by AR is an almost impossible task.

The problem, though, is that if one were to totally eliminate AR, then there would be a huge tax shift from the former city of Hamilton to the suburbs. If one recalls, it was for this precise reason that AR was permitted by provincial legislation. No one will know this better than Councillor Clark who was in provincial government at the time of amalgamation. AR was put in place to cushion the suburbs from the kinds of shifts now being contemplated. That taxes will shift is made undeniably clear in the staff report which spells this out; and even the least canny of inner city Councillors knows this. The temptation to present a windfall tax reduction to some constituents just before a municipal election will be very strong for some inner city Councillors to resist. But there will be consequences to the unity of the entire new city if the move is seen as a simple tax grab.

On the other side of the debate, however, are the suburban Councillors who also understand this equation. Their own inclination not to allow the shift to occur will be equally strong. If the battle lines are drawn, both sides will be forced to protect their turf, or more to the point, their ratepayers’ pocketbooks.

Part of the realpolitik equation which will factor into all of this is the very make-up of Council. There are 16 members on Council: 8 from the former city of Hamilton and 7 from the outlying areas, plus the Mayor. If the vote were only left to the Councillors, and if Councillors voted only according to the battleground lines, then taxes in the suburbs would be ready to increase exponentially. However, there is also the Mayor’s vote. Which side will he vote with? At the Committee at least, he sided with the suburbs. At Committee, the Mayor didn’t even want to have the debate until after the election signaling his potential distaste for the divisive outcome. Councillor Duvall’s motion contradicted the Mayor’s wish and we are into the discussion.

So, when it comes time to decide whose taxes will increase, and assuming that the suburbs and old city aligned along traditional lines, the Mayor’s vote will be pivotal. If he sides with the suburbs again, his vote will cause a tie which would defeat any motion to update the system and leave the status quo in place. Is this fair? Will it bring harmony? Hardly!

The task then is to change the paradigm. It is to remove the debate from its combative ‘harmony vs. fairness’ equation and figure out a way of actually building the city rather than re-igniting the amalgamation debate.

In order to do this, the first thing that must happen is for staff to re-do its report. Not that the staff report is inaccurate or misleading. It is neither. However, it is simplistic and short of substance as a starting point in a debate that requires ultra substance. The complexities of taxation must be more fully spelled out.

For staff to tell us in the Area Rated taxation specifics, namely Culture and Recreation, Fire and Transit, that the policy doesn’t meet current service delivery isn’t very helpful. For staff not to clearly emphasize that in Transit the model has always (even before amalgamation) had Hamilton pay more because they receive more service; and in Fire the suburbs get less service from a full-time/volunteer fire force than that provided in the former city of Hamilton with its excellent full-time contingent; and in Culture and Rec, the costs are driven by the decision in the old city to promote what some might consider Cadillac services versus the suburbs. Those decisions, which the former suburbs had no say in, cause the greatest costs. As a concrete example of this division in services, just look at the excellent bocce facilities in the old city versus those in the suburbs. It is like comparing Dom Perignon and Baby Duck!

As well, the staff report does not mention, because they were not asked to do so, the other high cost drivers that are not area-rated. Police Services, Water-wastewater services and the cost of installing CSO (combined Sewer Overflow tanks), and of course Public Health and Social Services. Where is the benefit going and who is sharing the cost for all of these services? What about identifying the cost of service-improvements to transit or Culture and Rec or Fire if AR is eliminated and the suburbs now want equal treatment with the former city. How much will this cost? There are probably other issues that could be identified just so that all the cards are on the table. A mature discussion will do no less than be totally frank with these issues which drive the taxes we pay. To single out AR for discussion is only one piece of the puzzle.

I was encouraged in the earlier debate that Councillors Clark and Jackson distinguished themselves by not voting with their colleagues on both sides of this old city/former suburbs divide. They chose to see things from the other side’s perspective. That augurs well, but doesn’t guarantee that when actual money-related decisions have to be made, all Councillors do not scurry back to what is politically safe.

If this were to be the case, there is only one ‘honest broker’ in the debate. And that is the Mayor! He is only one vote but he holds a very important card. His vote can make the decision between supporting the status quo, which will make the suburbs happy; or support a change in the AR system which will make the former city happy. His only guiding principle should not be ‘harmony over fairness’ it should be ‘harmony and fairness’. It will be up to the Mayor to monitor the progress and tenor of the discussion. He can signal that if Councillors are going to play parochial politics, his vote will go to the other side. If, on the other hand, Councillors are going to be fair minded, analytical, as concerned about the people in other areas of the city as they are about their own constituents, then the Mayor’s vote will also be for what is fair and harmonious. This process will require skill, resolve and clear-thinking. It will also define the ability to lead!

How this debate and the decisions which flow from it evolve, have the potential of making us forget the ‘Slots’ debacle or indeed cement its divisiveness in our collective municipal psyche.

I wish all participants good luck in this very important task.

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