ED ALLARD: High taxes will remain for the foreseeable future

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It’s not surprising that people insist city councillors can do more to reduce taxes.  After all, Cornwall is sitting on some $47 million in reserves of one sort or another, all earning dividends and interest.  It’s a fairly comfortable nest egg by anyone’s measure.  Of course, more than half that is the Progress Fund, which was wisely set aside by a previous administration.  That alone has brought some $17 million in interest to city coffers since it was first established some years back, which, of course, has been spent almost as fast as it was earned.  

Also, we have no real debt to speak of.  We still owe about $12 million for the new sewage plant, which will be paid for a year at a time from a rate increase a few years ago.  The Benson Centre debt is about the same and will be paid off over some 20 years from Progress Fund interest.  Then there are a few assorted millions for new fire and police vehicles, recreation equipment and a loan for police sick leave benefits, which are being paid directly from property taxes.  In all, the tax burden to pay down these loans is well below most other cities.  

Yet, despite this very favourable position, our tax rate is notably higher than other cities, due in part to lower assessment.  People in Toronto pay about a third less tax for properties worth more than twice what any home in Cornwall is worth.  In fact, our tax rate has caused those with any real money to scurry to the adjacent townships.  It’s not for nothing that the mansions are all outside of town.  But that also keeps city assessment below the provincial average.  

Efforts to reduce taxes have befuddled successive city councils for many years.  The best they’ve managed is to keep tax increases down to just less than 2% a year, at least recently.  But there has been no year in recent memory when property tax bills actually went down.   

Of course, if council used the money in the bank to offset taxes, we’d soon find ourselves in a world of hurt.  Those funds are like overdraft protection.  They have been set aside to cover unforeseen expenditures that can occur from time to time, such as the long and rather costly winter we just came through or the recent flooding that many homeowners remember all too well.  

In fact, according to the city’s auditor, the working reserves are too low, which sounds like a contradiction with $47 million in the bank.  But each reserve account has a different purpose and strict rules for how it can be used; so moving money from one to the other is intentionally difficult.  Ideally, working reserves should be about $4 million or more, but councillors have been raiding that particular cookie jar over the years and that account is now just barely above zero.  That’s not a healthy situation.

We should be thankful that they haven’t yet raided the Progress Fund.  There have been attempts to do that to pay down existing loans and save on interest costs, with a commitment to pay it back, of course.  That sounds like good financial sense.  But if they can’t keep their hands off the “free money” in the working reserve account, I would seriously doubt any long-term commitment to pay back the Progress Fund.  

As for taxes, they’ll stay up where they are until city council has an adult conversation about changes to the way services are delivered.  In an election year, that’s not going to happen.

And that’s the way I see it.

Organizations: Progress Fund, Benson Centre

Geographic location: Cornwall, Toronto

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