Cities and Towns are struggling. Many councils such as Stratford and Charlottetown are looking into 2009 and wondering how they will cope.
However reluctantly, many will, in the end, resort to raising property taxes. But in so doing, they run the risk of of creating a crisis.
Here is the problem.
If you fail to pay your property taxes, you can be evicted and your house sold under you. No other failure to pay brings with it such dire consequences. The last 15 years of property price booms have also meant that the values placed on houses now are way off and too high. So the burden is much greater than can easily be handled.
Property taxes are also very regressive. Pensioners are the most vulnerable. So are the working poor.
There is a risk in 2 years of mass evictions and huge stress on the most vulnerable of us.
So what to do?
First of all to acknowledge that we have this problem. Then to do the hard work of finding another route. Make the cuts that have to be made. Rethink what city/town should do as a minimum. The good times and downloading have meant that cities have very wide areas of activity - these surely have to be cut back to the essentials.
This is the hard first step. What are the essentials that a city must attend to? They surely are related to ensuring that the city works as a system and that the services that are vital, not important, not good to have - the services that are vital are protected.
Second to rethink how cities are funded - this is not a local but a national issue. I think that there has to be a shift away from taxing homes to getting a lien on the Provincial and Federal income and sales taxes. Cities have to access the largest pool of tax and that pool that is the least regressive.
The cities are where most Canadians live and are where the economy is driven. But cities are the least able to access the taxpayer.
The irony is that the level of government that has the least impact on us, the Federal Government - has the best access to the taxpayer followed by the Provinces. The reality is that our roads, our police, our schools, our water are mainly payed for by our cities. Over time we need to correct this imbalance.
I doubt that the Feds and the Provinces will give up their priority easily. But there are a lot of votes in the cities. Time for them to feel their latent political power.
For if I am right and we are indeed in for a long term recession, then we will arrive at the crisis. It is surely better to have dealt with it before we get there?
But the step that is in the cities control is the shrinkage of the budget to the vital. This will in turn provide the political leverage for the rest. For it will then be possible to push the burden back up to the Provinces and to the Feds:
"We are not going to put people out of their homes - we are not going to give up our police force, we are not going to stop snow clearance - but if we do - it's because you the Province or the Feds chose it"
That will put the fox among the chickens.
