ERIN – Councillors here have approved a 1.5 per cent increase in the town tax levy, but they acknowledge they are not putting away enough money to meet future infrastructure needs.
The 2019 budget, with $11.5 million in operating expenses and $4.4 for capital projects, was unanimously approved at the Dec. 18 council meeting.
Residential property owners will pay not only the levy increase but the impact of any increase in the assessed value of their homes.
Finance director Ursula D’Angelo reported the overall increase in town-wide assessment is 4.91%, of which 1.42% is related to new building construction or property improvements.
The balance of 3.49% is the average increase in Erin home assessments, which are set by Ontario’s Municipal Property Assessment Corporation (MPAC). Province-wide reassessment is done every four years – most recently in 2016 – with increases phased in annually.
Each 1% tax increase represents an additional $14.60 on the tax bill of a house assessed at $500,000. So the 1.5% levy hike will mean an additional $21.92 annually, and the 3.49% average assessment increase will add another $50.95, for a total average impact of $72.87 in 2019.
“Who knows what next year will bring?” said councillor John Brennan.
“It’s conceivable that we will have an assessment growth of such that we can have a negative impact on the tax rate, assuming that the Ospringe [subdivision] development goes through with any kind of speed.”
Some homes may have little or no assessment increase, while others will be well above the average. Overall, D’Angelo said the assessment value is less than actual home values in the real estate market.
Last year, when the budget came to council, it had a 0.5% tax levy decrease, thanks to assessment growth. Council decided to add money to reserves, bumping the town rate up by 0.5% for 2018.
Town taxes represent only about 25% of total taxes, with county taxes making up about 56% and education taxes the remainder. The county increase was 2.5% last year and could be 2.9% this year, according to Mayor Allan Alls.
“The 2019 budget has been a smooth and effective process, with the help of the community identifying their needs within the budget survey”, said Alls.
“This budget allows the Town to continue to move forward with enhancing key initiatives in 2019, while also allowing us to plan responsibly for the future.”
The town’s 2019 budget process provided opportunities for public input through a survey, and included a series of three budget workshops, which were sparsely attended.
In 2018, Erin benefited from stronger assessment growth in other parts of the county. When the overall impact was finally calculated in June, combined property taxes for the average Erin homeowner were down 1.8%.
D’Angelo told councillors the amortization of capital assets – the depreciating value of infrastructure such as roads, bridges and water lines – is excluded from expenses in the budget, as allowed by provincial regulation.
But she reminded council the 2019 contribution of $587,000 to the infrastructure fund does not come close to covering the $2.5 million in declining asset values.
“We are not really setting money aside for the assets we are consuming,” she said. “The town will require greater future annual financial commitments to meet lifecycle replacement requirements for the town’s asset base.”
Councillor Mike Robins said he is concerned about the amortization. He said the decision at the previous meeting to bump up the tax levy increase from 0.5% to 1.5% (adding $70,000 to the fire truck reserve) was a “good start”.
“The number could be considerably higher if we were going to re-invest back into the community,” he said.
Robins said while wastewater infrastructure is not yet part of the town’s asset management plan, staff should be planning for that element, since reconstruction of roads and replacement of storm sewers and water lines should be done at the same time as wastewater sewers for maximum efficiency.
He also urged staff to develop a series of milestones by which residents could measure the delivery of “key deliverable items”.
Initiatives in the 2019 budget include a growth management study, a wastewater financing options study, a development charges study and a water rate study.
Recreation work includes $160,000 at the Erin Community Centre for accessibility renovations, a new flat roof and an ice resurfacer, $40,000 for online booking software and $63,000 for parks fencing, playground equipment, a tractor and bleachers.
Paving the 5th Line, from Wellington Road 22 to Cedar Valley, will cost about $75,000.