On Monday night we’ll be looking at the 2024 budget, and you can see the draft budget here. As it currently sits, we’re looking at an overall budget increase of almost 9%, and a tax increase of just over 7%. I know that number will set off alarm bells for some, even though it’s about the same as last year (maybe it will set off alarm bells because it’s the same as last year!). But let’s look at the number in context, and then look at driving factors.
Tax Increases, In Context
There are two contexts to consider when we talk about a 7% increase (which so far in this post is completely abstract). First, in relation to your tax bill: it will amount to a few hundred dollars more on most tax bills in Brighton, based on a ballpark of $400k assessment value. Keep in mind that assessment value is not the same as market value, and that the province has refused to update the assessment because doing so is perceived as politically unpopular; I wrote about it in depth here. But rest assured, even though your house is likely worth much more than $400k, you aren’t being taxed on your market value! Even so, a few hundred dollars is significant, and I understand if it’s alarming.
The second point of context is to look at Brighton property tax rates, and increases, in the broader context of other Ontario municipalities. Our budget contains this chart for comparison purposes:
Compared to other urban communities in Northumberland, Brighton has the lowest taxes by a fair margin. Cramahe’s urban tax rate is higher than ours by about the same amount as the proposed tax increase for this year, so you might say that they’re a year ahead of us. But if you look at Cobourg, and especially Port Hope’s urban rate, if we matched them we would have an extra three to five million dollars to work with! I can only dream of having that much money to work with, and it would be very possible to spend it wisely in ways that would provide significant value to our residents. But rest assured, our council and staff are very careful about not increasing taxes too much, focusing on what is strictly necessary and highly strategic. It isn’t always desirable to have more services, our goal is to ensure that we have the right services. On the other hand, it isn’t always desirable to have less services, or to save tax money at the expense of being able to deliver existing services well.
And while a 7% increase feels big, both Cobourg and Port Hope are looking at 8% increases this year. They might get theirs down a little, and ours might even climb a little, but on the whole we’re all facing the same increased financial demands. It makes sense that we’re all increasing at about the same pace. Let’s look at why.
What’s Driving Tax Increases?
There are two main drivers of tax increases this year, and it seems to be the same for every municipality I’ve looked at: downloaded costs from the province, and staff pay.
Downloading
When we talk about “downloading” costs from the province, we mean that they’re passing the buck to municipalities in a lot of different ways. For example, while healthcare delivery is the province’s responsibility, the municipality of Brighton pays hundreds of thousands of dollars to support your access to healthcare every year. That includes physician recruitment costs, purchasing hospital equipment, and contributing to hospital foundations (we had delegations from hospitals as far away as Kingston). At the Rural Ontario Municipal Association (ROMA) conference last week, ROMA released a report indicating that rural property taxes contribute $481,000,000 annually to healthcare costs. The province’s healthcare system is broken, and municipalities are patching it the best we can to ensure that our residents can still access a doctor or an emergency room.
Another example is Conservation Authorities. I wrote recently about my experience on the Board of Directors for Lower Trent Conservation Authority as we set the budget, and again about how the province has set up a conflict of interest for board members that more or less requires us to put our municipal budgets ahead of the health of the conservation authority. Lower Trent really needed a 19% increase in their municipal levy this year, as the province has been steadily cutting their funding from the other side; but the board voted for a much lower increase (still 13%), because while doing less would severely handicap Lower Trent, doing more would cause a larger municipal tax increase. As it is, municipal taxes will still increase, while Lower Trent will continue to struggle with not enough funding.
Staffing
The instability and decline of provincial funding has created a lot of upheaval for municipalities. Changes to the Conservation Authority Act have reduced what the CAs can do for municipalities, while at the same time creating massive demand for planning consultancy services, which has led to thousands of open Planner positions as municipal planners and CA staff take private sector jobs. At the same time, the workforce is aging, with a lot of senior staff retiring. With so many job openings, many municipal staff across the province are keeping their eyes open for jobs in other municipalities that pay better or have better benefits.
It’s important to note that the cost of turnover is much higher than the cost of giving your existing staff a raise. It is very cost effective to pay our staff well; if we skimp on their wages, they can easily go elsewhere, leaving us with the cost of replacing them. And it’s not just us; on Consider This Northumberland this past week, Cobourg’s Deputy Mayor Nicole Beatty mentioned staffing as a major point of increase in their budget as well. I suspect it’s the same all over.
But it isn’t just raises. Included in our budget this year are several new staff positions, based on recommendations coming from the CAO’s organizational review and several other reports. In 2023 Brighton paid consultants to produce a Fire and Safety Master Plan and an IT Master Plan, both of which recommended increasing staff in those departments to ensure that they can continue to be effective. In other cases, the experience of our existing staff has shown areas where having additional staff would be extremely helpful; positions that are currently bogged down with too many responsibilities would be freed up to be far more productive in developing new programs or approaches, improving service quality and efficiency. If we set a high standard for service delivery, we need to ensure that our staff have everything they need to meet that standard or we will not only fail to meet it, we will lose our staff in the process.
Future Budgets
You’re more than welcome to join us for the Committee of the Whole meeting on Monday night to watch council deliberate on the draft budget. I am hopeful that we will pass it this week, but it’s quite likely we will have more to discuss than a single meeting can hold.
Some things that didn’t make it into this year’s budgeting process, but that I expect will be part of future budgets, might be transformational:
First, we are planning to transition to a five-year budgeting process. Northumberland County began that process this year, and it is increasingly common elsewhere too. As it stands, we budget one year at a time even though we do our best to forecast the needs of the community for five years or more. By actually budgeting for five years at a time, we will help ensure a longer-term planning approach that helps secure funding for big projects and programs that have long time frames. I don’t know if we’ll go straight to five year budgeting next year, there might be a two or three year approach in between, but expect us to shift toward a longer-term perspective somehow.
Second, during the election campaign I talked about participatory budgeting. While I haven’t yet pushed for it in the form of a motion, I’ve been talking about it a bit with councillors and finance staff, and it’s something I would like to pursue more in the coming years. If you’re interested in this innovative practice, you can read more about it here, and I will certainly write about it in the future!
I would dearly like to know 3 things. First why has increased assessment due to new construction not kept pace with costs? Second, how much either by direct or indirect spending do Brighton taxpayers spend to provide services to all the new housing development. Third, how do those of us not on town services ensure we are not subsidizing water and sewer services, not to mention upgrades to the treatment plant, for the town proper.
Hi Dave,
Thanks for your questions!
1. The principle behind Development Charges is that “growth should pay for growth.” But even at the best of times, growth is a ponzi scheme: at best, DCs cover most of the up-front cost of servicing new developments (not all, some are folded into other costs), and property tax levels are not high enough to cover the upkeep of all existing infrastructure. We depend on grants from the federal and provincial governments to cover a lot of our infrastructure maintenance costs, but it’s still tight, which is why municipalities are almost perpetually looking for new developments to get more DCs just to stay afloat. There’s a great video about that here: https://www.youtube.com/watch?v=7IsMeKl-Sv0 (it’s American, but the same principles apply, and the channel is by a Canadian)
Last year the province also made changes to how DCs work, so we get less revenue from them and are more limited in how we can spend it. Their reasoning was that they wanted to make housing more affordable, but I suppose they weren’t thinking about property taxes – because if DC revenues go down, property taxes have to go up to make up the difference! AMO calculated the potential losses to municipalities in Ontario to amount to $569M/year. If that actually made housing markets magically go down, it might be worthwhile; but in reality, housing costs whatever the market will bear, and several other factors are WAY more important to the market than a few thousand dollars of development charges per unit.
2. I can’t even estimate how much, by direct or indirect spending, we pay for new development. Development application fees are supposed to cover the time spent by our planners and building officials, but looking at the budget we see revenues of ~$140k and expenditures of ~$534k – so there’s almost $400k more costs to run that department than there is revenue generated through fees. That said, development charges aren’t a line item right there; they go into a reserve fund rather than general revenues, so they’re accounted for elsewhere. At least in theory they’ll offset most of those costs, but how much and how exactly they do so is complex enough that we have to periodically hire a consultant to do a study about it. The Building department is clearly revenue neutral in our budget, as it is required by law to be. All of that to say that, at least in theory, development pays for itself (initially); in practice, it’s complicated.
3. Water and sewer services are not paid through property taxes at all; they are funded entirely through user fees, with all user fees going into a reserve fund and all expenditures for water and wastewater coming from those reserve funds. That includes infrastructure and operating costs, as well as planning for expansions, etc.
“Participatory budgeting” – what a lovely concept however it does not work in small municipalities with Councils that do not listen. I remember a few years back I was in a conversation, in Mexico, with a Councillor from Puerto Allegro, Brazil, the City that pioneered the approach. The way they did it was to form committees in each of the barrios of the City, the residents of those barrios decide what kind of services they wanted the City to provide and cost it out. The residents then elected delegates to the City wide process who then decided how to divvy up the funds. I asked the Councillor how did they handle the political problem of leaving barrios out of the available funds. Her answer was simple – “every barrio got something!”
Bringing that back to Northumberland, the County at that time – the 90s did the same thing. With thirteen munis and twenty-six Councillors the budget process consisted of delivering the County services regionally. That’s why some Twp’s roads were repaired whilst others in other munis with a greater need were ignored. “Everybody got something!”
Fast forward to today with the need to adhere to five year Capital Budgets and immediate needs – often driven by consultants reports, the average Citizen that ventures out to talk to a Council during budget deliberations rarely sees their well researched and futile pleas for anything ever reach the discussion table. After all how much time and credibility will a Municipal Council give to a layperson during budget discussions?
Their is an answer to that question. Seek out Citizens who wish to participate and give them an equal voice in the discussions – all discussions, and I mean discussions and debate not just some token five minute time to usually deaf ears. After the Councillors are elected not the petitioners/speaker/volunteer experts.
When you find the Canadian version of Participatory Democracy in Budgeting let me know it has eluded us all for decades!
Thanks for this Ben! Puerto Allegro is certainly mentioned in all of the literature I’ve seen on the subject.
As I understand it (and would advocate for it), participatory budgeting follows the citizens’ assembly model to assign decisions on a portion of the budget to residents, who are briefed on all of the matters in the same way that councillors are.
I suspect that our context would see less dramatic results than Puerto Allegro, which is home to millions of residents. One of the benefits of participatory budgeting is that residents often have a different perspective on what is most needed than politicians, with the example I’ve seen most often referring to transit funding: residents know very well when and where transit funding needs an increase, while politicians in a major centre like that are unlikely to even use it. In Brighton we don’t have transit at all, and there’s no significant economic stratification between me and anyone in Brighton (at least with regard to municipal services). So I don’t know that there’s as much need here as there is in larger centres, at least in that respect. To me, the benefit is in encouraging thoughtful engagement, rather than armchair politicking and populist outrage. The latter is on the rise at almost every level, and anything we can do to give people a more meaningful engagement is a big positive!