Budget time for municipalities is oftentimes based on council’s willingness to hold a two per cent residential tax increase. It was the goal from the start of the budget process in South Dundas for each of the last three years. This municipality is not alone in the practice of aiming for two per cent. Many municipalities use the two per cent increase as a budget strategy. In fact, many politicians base election campaigns on such a promise. Aiming for a two per cent tax increase is nothing more than a cop-out – the lazy way to budget leaving taxpayers holding the bag. Starting from a prescribed increase places the proverbial cart before the horse.
All budgets should be set based on need. Departments should assess what the need is for the following year and present to the budget meeting. Once prioritized and reviewed, discussion of tax rates or service cuts can begin. Department requests should be cut starting at the bottom of the priority list until a number everyone can agree on is reached. This work is one of the most important jobs of council.
Should a tax increase be needed and it is high, council has a responsibility to justify such a tax increase. If no increase is needed, then no increase is needed. That decision should be made carefully to ensure that holding the line will not be to the detriment of the municipality. Deferring maintenance and putting off equipment purchases helps the bottom line now, but the long term costs may be much greater.
That said, should this council enter into the budget process with a goal for tax rate increase? We think not. Why not go for zero? In setting the tax rate increase at zero, the municipality would still see additional revenue over the previous year based on increased MPAC assessment values and new assessments from new homes built. This rewards the municipality for positive growth.
Tackling a prioritized budget list, while working for a zero per cent tax rate increase would show fiscal prudence, while still looking after the needs of South Dundas. This is not a new concept. South Stormont adopted a zero per cent tax rate increase for 2018. South Dundas had four years of budgets with this same zero tax increase, during the 2006-10 term of council. Since that term of council, tax increases have been the order of the day. Council should not take the simple two per cent cop-out, but work to a fair budget that meets South Dundas’ needs.