York Region proposed budget includes higher taxes and debt

YorkRegion.com
Dec. 1, 2016
Lisa Queen  

This year’s proposed York Region budget comes with a higher than expected tax hike, an increase in the region’s debt, talk about the possibility of new taxes down the road and worries about a slowdown in growth.

The proposed budget, which includes operating expenditures of $2.1 billion and capital costs of $942 million, could boost taxes on the regional portion of the property tax bill in 2017 by 2.87 per cent.

That is higher than the 2.69 per cent council had forecasted it would be. 

Council is expected to approved the budget on Dec. 15. 

The tax increase for 2018 is now forecasted at 2.65 per cent, higher than the predicted 2.35 per cent.

The higher than expected proposed tax increases can be attributed in part to York Regional Police, who are “modestly over their outlook for 2017 and they are significantly over their outlook for 2018,” regional treasurer Bill Hughes said.

The department is looking to hire 21 new officers next year, which is close to double the previously planned level of hiring, and it also wants to spend $1.8 million to hire in advance of upcoming retirements, he said, adding some revenue from the provincial government will help to offset the costs.

Meanwhile, slower than expected population and employment growth has resulted in lower than hoped for development charges (DCs) on new construction, which is raising some alarm bells among councillors worried about future revenues.

The region is expected to collect almost $300 million less in development charges over the next 10 years than forecasted, although that number could change when council approves new development charge rates next year, Hughes said. 

The region’s debt will climb to a peak of $2.9 billion next year, which is more than 10 times what it was in 2002, more than five times what it was in 2004 and twice what it was as recently as 2010, Hughes said.

The debt can be blamed on the region having to pay the costs of building infrastructure for new growth before it is able to collect development charges, he said.

Over the last few years, the region has been taking steps to manage the debt, which a few years ago had been projected to top $5 billion by 2020, Hughes said.

However, the debt situation will become “noticeably worse” beginning in 2022 because of lower than expected development charges coming in, he said.

“We will see what impact a new DC bylaw has on our development charge collections and therefore on our debt levels,” Hughes said.

“It is possible we will need to look at some capital (project) deferrals in the 2020s as part of next year’s budget process and subsequent budget processes. But it’s also possible we won’t.”

Deferring capital projects last year caused an outcry in some municipalities, most notably East Gwillimbury where there was resentment with delays to the Upper York Sewage System. 

Meanwhile, the region is facing potential financial risks in 2018 including downloading of Presto transit costs and potential loss of revenue due to fare integration when the Spadina subway opens.

The region should explore future revenue sources, especially to fund growth-related capital costs, said Hughes, pointing out the land transfer tax in Toronto has been a financial boon for the city.

However, the province has ruled out allowing municipalities outside Toronto to introduce a land transfer tax.

If a 2.69 per cent tax increase is approved for 2017, that would work out to an average increase of $66 on the regional portion of the property tax on a home assessed at $577,000.

Due to variances in property values across the region, that would work out to different averages in different municipalities.

The lowest average increase would be in Georgina at $35 while the highest average increase would be in King at $78.

The average increase in East Gwillimbury would be $53, while in Newmarket it would be $51, in Aurora and Whitchurch-Stouffville it would be $62, in Markham it would be $67 and in Vaughan and Richmond Hill it would be $72.

Hughes called the proposed budget a good new story.

“It has a number of good features, just like the previous two budgets in the multi-year budget cycle. There are some improvements to service levels, not a huge number of improvements but some improvements to service levels and there’s more investment in transportation capital and more investment in water and wastewater capital and more savings for capital asset replacement. All good things,” he said.

“(There will be) no tax levy debt in the next 10 years, no rate supported debt and a substantial increase in reserves.”

At $6.1 billion, York is investing more in capital projects over 10 years than any 905 region, Hughes said.