Monday, November 23, 2009

Political Fear of Making Decisions

The term is called "area rating". Most municipalities and regions use area rating as a means of more accurately taxing residents for services received. The most common use of area rating is with transit. As an example, if you live in a rural setting with no transit services whatsoever, you likely pay less taxes than that of your friend who lives in the suburbs close to a transit stop. While not all municipalities adopt area rating as a means to properly balance taxing for services received, it remains a universal application. And to that, the method of delivering area rating predominately sits in a rural/urban split, or variations thereof. Except in Hamilton, Ontario.

When the City of Hamilton was amalgamated with the former Towns of Dundas, Ancaster, Flamborough, Stoney Creek, and Glanbrook almost 10 years ago, the residents of these smaller towns were put in an obvious state of protectionism, not only on their identity but on their fees for services structure that was in place at the time. Due to add insult to injury was the impending reassessment values of homes which tax rates are applied against, as this was expected to take homes previously assessed at a lower rate to see upwards to a reported seven times the value. To illustrate this, a home situated in any of the former Towns essentially went from being valued at $150,000 to $400,000 thereby creating an instant tax rate increase with no changes in services received. While not all homes in the former Towns experienced this increase, what was recognized by the Townsfolk that generally speaking, homes in the former Towns were worth more than the old City of Hamilton. And in their minds, this means that the new City of Hamilton is being heavily subsidized by the richer former Towns. Politicos of the time recognized that this was going to be battle of epic proportions, so they recommended that instead of enacting area rating based on the normal 'tax for services' formula, that they instead enact area rating based on former municipal or Town boundaries.

But it doesn't stop there…further to this "former Towns" vs. "old Hamilton" boundary area rating system, the area rating actually varies by former Town. To see this in action visit and input $300,000 as the home value, then click on the various former Towns to gage the tax variances. While the tax calculator only offers choices of whether one is within a transit system, their also is the imbalance of how Fire services are applied. The best example of this is in Stoney Creek: they pay a single tax rate for Fire Services, but they have 5 Fire Halls…some with Full Time, some with Volunteers, and some with a Composite (a blend of volunteer and full time employees). So if you resided in rural Stoney Creek, you're essentially overpaying for a service because the level of service is not the same as a resident in urban Stoney Creek who has the luxury of Full Time fire fighters available at all times.

So here we are some 10 years later looking through the same broken glasses trying to figure out a way to fix this crazy area rating formula. While local politicians recognize that it needs to be fixed…and should be fixed, they stall out of the gate for fear of upsetting the folks that put them in office. We've seen a number of City staff reports over the past years recommending a review of area rating brought forward on the Council floor…only to be deferred until the next budget year. Now we appear to have some solid options on how to approach and mend the system, but again it would appear that this time (with thanks to the Mayor), the recommendations will be reviewed after the next municipal election.

This resistance to make a decision on area rating is disconcerting at best. Hamilton should be recognized by a literary society for the volumes of chatter that becomes connected with a decision. Sometimes the decision fails to materialize due to the weight of the communication material associated with the issue. This one cannot afford to get lost on the floor, in the sea of paperwork and consultations…just make a decision and move on. If the voters don't like it, then they won't vote you back in…remember, you're not in office to make voters happy – you're there to make Hamilton prosperous (and that will undoubtedly make them happy in the long run).

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