*sent 31 January, 2012
To all Midland Town Council;
Please find below some suggestions concerning budget planning that we are submitting on behalf of midlandcommunity.ca
We have also provided the same letter to you as an attachment to this e-mail which includes a chart showing key comparative data for all Simcoe County Municipalities.
Please feel free to contact the writers personally if you wish clarification or for any other reason.
Roy Ellis and George Dixon
January 31st, 2012
Mayor, Deputy Mayor and Town Councillors:
Re: Open Letter on Future Budgets
The purpose of this open letter is two-fold. First we want to acknowledge and express sincere appreciation for Council’s hard work and commitment in coming to recognize that Midland’s historical rate of spending is not sustainable and in acting on that realization in adopting Midland’s budget for 2012, albeit by a slim 5-4 vote.
Second, looking to the future, there is not yet a clear vision for striking a better balance between spending and services in order to improve Midland’s ability to compete for growth. This open letter therefore offers our thoughts on establishing goals for Midland’s budget for the remainder of your council term.
We believe it is premature to commit now to increased spending in 2013 and 2014 for a number of reasons including the upcoming management review of Midland’s operations and the uncertain direction of the local economy and the global economy.
We think these are some important facts that also bear on the issue:
1. Midland’s economic development initiatives will be severely weakened or completely frustrated as long as Midland is and is seen as a high tax municipality.
2. Midland cannot afford to have the highest taxes in Simcoe County for new housing.
3. Midland’s local taxes are the highest in the County per thousand dollars of household income and per hundred thousand dollars of property value (see chart included in attachment).
4. Midland has an aging population with fixed or declining incomes – more than half our population will be over 65 in 10 years.
5. Built-in wage and benefit increases outstrip inflation and add to Midland’s operating costs each year.
6. Midland saw virtually no assessment growth in 2011.
7. Police and Fire cost increases cannot be sustained without significant increases in the number of households sharing the load.
8. Midland’s spending increased by a combined $1.7 million in 2010 and 2011. If Midland wants to see its economic development initiatives succeed, that money needs to be removed from the budget and a new base established.
9. Applying a fixed percentage increase on an already high base widens the gap between high tax and low tax municipalities.
These are some steps Midland can take to improve its position:
A. Set a multi-year goal to lower local tax and spending levels to allow Midland to successfully compete for development opportunities in the region.
B. Review overall and department-by-department spending compared to other municipalities. Ask why some municipalities can spend appreciably less than Midland to provide a given service? What are best practices for providing quality services at lower cost?
C. Provide services to residents of other municipalities only on a full cost recovery basis. Midland currently provides significant subsidies for non-residents who use the Library and NSSRC. Every taxpayer in Midland pays a share of the significant net operating costs of the Library and NSSRC. But only those non-residents who actually use the Library and NSSRC contribute to their costs.
D. Disregard the unfounded fear that if user fees for hockey increase, net revenue at the NSSRC will drop because the number of users will decline significantly. Most people who want to play hockey will play hockey even if a small number of recreational players decide curling, skiing and bowling are suitable and affordable substitutes.
E. Place more reliance on cost recovery user fees for residents and non-residents alike for two reasons. First, user fees help measure the true value the public places on a given service and help eliminate the risk of oversupplying a free or deeply subsidized service. The second reason is basic fairness. Why should a widowed pensioner or any other resident of modest means be required to pay property taxes to subsidize hockey or culture for affluent households in Midland and neighbouring municipalities?
1. Consider zero-based budgeting as a necessary exercise to carry out at regular intervals – does the perceived need that brought a service or program into existence or that resulted in a particular level of service still exist? Have priorities changed? Since no one has unlimited resources, get as much benefit as possible from the resources you allocate.
2. Set a five-year goal for Midland’s local taxes per household to be no higher than the 60th percentile in Simcoe County. This would improve Midland’s competitiveness for development opportunities but still allow above average spending and above average service levels. At the 60th percentile Midland’s average local taxes in 2009 would have been about the same as New Tecumseth’s or $1,241 instead of $1,677 – about a 25% reduction.
3. Allocate no less than 50% of new revenue from development to tax reduction and the balance to budget increases at least until Midland reaches the 60th percentile goal.
4. Apply any unspent surplus from the prior year to the current year’s budget.
5. Consider how services are delivered – the opportunity to contract out helps ensure services are provided at competitive cost whether ultimately provided in-house or contracted out. Simcoe County contracts out collecting solid waste and recyclables. Many municipalities contract out plowing, salting and sanding local streets.
6. The upcoming Management Review can be a good opportunity to gain understanding and improve efficiency if it is defined properly and includes all stakeholders.
7. Establish a target each year only after you have completed these other things. Until you know what the real consequences of achieving a certain target will be, the target is just a number pulled from thin air.
Thank you for allowing us the opportunity to share some views on a complex matter. We appreciate there will be no quick fixes here; instead a combination of careful consideration, acceptance of the new reality and hard work will be needed to see this through.
George Dixon and Roy Ellis
on behalf of midlandcommunity.ca