Council Address – Budget Deliberations 2001

Delegation:

Ted Farron, Chairman of the Board, Windsor & District Chamber of Commerce

Ed Miles, CA, Chairman, Finance & Taxation Committee

Linda Smith, President, Windsor and District Chamber of Commerce

December 6, 2000

Your Worship and Members of Council:

Thank you for the opportunity to appear before you today.  We would like to begin by stating that we are not here today to seek financial aid from the City of Windsor.  We are not looking for subsidies, not looking for loan guarantees, and not looking for the City to support an increase in our operating budget. 

Instead, as representatives of the Windsor and District Chamber of Commerce, representing over one thousand, four hundred member businesses, we are here to express our concerns with the Draft 2001 Budget released this week.

As most of you know, our members include numerous local businesses in Windsor and Essex County.  As a group, they constitute a large portion of the property tax base in this City, and contribute substantially to the area in terms of employment.  We consider it an honour to represent such a vital and intregal part of our community.

We are pleased that the Mayor has recognized the importance of the business community, and is putting together a “Small Business Task Force” to address issues relevant to this vital sector.  Over 80% of our membership is comprised of Windsor/Essex “small businesses”.  We look forward to working together with the administration to keep Windsor as one of the most prosperous cities in Canada.  It is also very encouraging that Council is receptive to the concerns of the business community and will be working with the Chamber in such a proactive and interactive manner. 

Taxation

But there comes a time when action must be taken.  We have come today to again voice our concerns over property taxes.  Industrial and commercial tax rates are as much as 4 times the residential rate.  In addition, the Administration’s “fiscal fitness policy” of tax increases of not greater that 1% may well have been appropriate in years where the assessed values did not change.  However, in year’s where the assessed values change as in 2001, the fiscal fitness policy should be amended to ensure that the tax rate increase is adjusted downward to reflect increasing assessed values for identical properties. 

Let’s consider the fiscal fitness policy based upon the sample property set out in appendix A (attached).  We can see from the example that the result of the “fiscal fitness policy”, in conjunction with the updated market value assessment, has resulted in an effective increase in property taxes of 9.3%!  This result is supported by the Draft Budget which reflects a significant increase in tax revenues.

Of course everyone wants fiscal fitness.  But the proposal of inflation-minus-one percent increase in the tax rate, when assessments are increasing, is NOT fiscal fitness. Assuming that the increased assessed values in 2001 for the City of Windsor exceeds 1.7%, the tax rate  should actually be reduced by the excess to achieve the fiscal fitness policy objective of limiting tax increases to inflation minus one percent.

High property taxes affect people’s decisions.  High residential property taxes in the City contributed to the unprecedented growth of housing in areas of the county with lower rates.  We don’t want to see businesses re-locate outside the City.  The economic tide may have turned, and it sends the wrong message to approve a budget based on tax increases.  We urge Council to set tax rates for 2001 at a level that is revenue neutral, after taking into consideration increasing assessments.  This could very well result in a reduction in the tax rates where the assessments have increased by more that 1.7% over the past three years.   And further, set a longer-term goal of achieving reductions in commercial and industrial tax rates that can be held up to prospective new businesses that Windsor is business-friendly.

Spending

Members of Council, it is not our intention to be unfairly critical or unrealistic.  As business owners, we appreciate the uncertainties in any budget process.  We recognize that the City of Windsor is facing financial uncertainty because of provincial downloading.  We would be happy to work with the Administration (where appropriate) to make representations to senior levels of government with respect to these issues.  However, in an environment where scarce resources must be allocated, we believe that rather than merely increasing spending budgets, resources should be allocated from other areas within the Corporation to finance the items of a higher priority. It is unfortunate, however, that only capital expenditures have been reduced in this budget.  Many would argue, and perhaps legitimately, that of all the activities which are carried out by the City of Windsor, the capital budget is of the greatest priority to be increased. 

It is particularly disheartening to see ever-rising budgets at the Library (up 5%), Huron Lodge (up 11%), Transit Windsor and Parks and Recreation (each up 9%).  With all the investment in technology, we wonder how long it will be before we see some reductions in operating costs.

Debt Reduction

Finally, we would like to briefly comment on the issue of debt reduction.  Once again, the administration deserves credit for helping Windsor to achieve a very favorable credit rating.  We would note, however, that the gross debt is expected to exceed $124M in 2000.  Perhaps more concerning is the amount of guaranteed loans and other “off balance sheet” debt not disclosed.  We would caution Council to remember that Windsor may be at the peak of a business cycle, and that guaranteed debts sometimes become actual debts.  We believe this should be disclosed in the budget document.

Let us conclude by stating that we are looking forward to working with the Administration during the budget process and throughout the year.

With respect to the 2001 Draft Budget, we encourage Council to take a firm stand against direct and indirect tax increases. 

We believe a tax freeze should be implemented immediately.  Given the growth in assessed values from 1998 - 2001, the spirit of fiscal fitness would dictate that the tax rate be reduced in 2001 to compensate for the increased assessed values.   To balance the 2001 Budget, we would propose to limit increases in the department and agency budgets compared to 2000, rather than allow the usual automatic annual increases.    

Once again, we appreciate the opportunity to appear before Council this evening.

Respectfully submitted,