Piecemeal tax policy won’t work

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Mayor Brian Bowman is in the thick of a political and public opinion battle over the merits of new development fees on new homes — roughly $18,000 on a modest new home — and on new commercial and industrial development in Winnipeg. The fees are opposed by the broad development industries.

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Opinion

Hey there, time traveller!
This article was published 14/09/2016 (2211 days ago), so information in it may no longer be current.

Mayor Brian Bowman is in the thick of a political and public opinion battle over the merits of new development fees on new homes — roughly $18,000 on a modest new home — and on new commercial and industrial development in Winnipeg. The fees are opposed by the broad development industries.

Whether new development pays for infrastructure or not is not a new debate for this city. What has consistently been evident, even in reports by civic administration, is that new development in fact does pay for new infrastructure and provides net surplus revenues to the city. The argument has always boiled down to the size of the net surplus and how those revenues are then used by the city, but never its existence.

The real issue the public should expect the mayor and councillors to come to grips with, given the sheer magnitude of Winnipeg’s infrastructure deficit, is how do we best approach it in a sustainable manner?

JOE BRYKSA / WINNIPEG FREE PRESS FILES Mayor Brian Bowman has touted growth fees as a way to fund long-term infrastructure construction and maintenance.

The truth is ignoring the problem and leaving it for tomorrow is a failed and irresponsible approach, but regrettably one that successive councils have chosen for too long.

Council was presented in 1998 with the Strategic Infrastructure Reinvestment Policy (SIRP I) report. It documented a then-annual infrastructure investment deficit of $80 million ($800 million over the next decade). It offered corrective strategies. Those were ignored. In 2000, SIRP II offered implementation strategies to close the annual $80-million investment gap. Those, too, were ignored by council, and the city limped along on its crumbling infrastructure.

In 2011, the Infrastructure Funding Council, commissioned by Winnipeg and the Association of Manitoba Municipalities, made 17 recommendations to address the growing infrastructure deficit. They were separated into three groups: ones that could be acted upon by municipalities alone; those needing provincial agreement; and ones associated with a joint provincial/municipal/national strategy to secure federal participation in funding municipal infrastructure.

The report urged a balanced approach to attack the municipal infrastructure deficit, which by 2011 had increased in Winnipeg from $80 million annually to $840 million annually — $8.4 billion over the next decade.

Most importantly, the IFC urged that Winnipeg, joined by all municipal governments, petition the then-premier to establish an expert group to assess the size of the municipal infrastructure deficit and structure a new balanced and shared fiscal arrangement to close the gap.

The IFC report recommendations were ignored.

Past mayors and councils have often focused on piecemeal “asks” of the province related to funding assistance instead of a balanced, comprehensive approach tied to a principles-and-outcomes strategy. The proposed development fee, rejected in the 2011 IFC report as lacking fairness, is yet another example of piecemeal versus comprehensive, an example of bad tax policy.

Essentially, if adopted, council would be asking roughly 2,000 families who purchase new homes in Winnipeg each year to pay $18,000 more in taxes. That would amount to $36 million in new taxes to the city each year. To put that in perspective, 2,000 families would be asked annually to bear a nine per cent increase in realty taxes. Such an expense gets lumped onto mortgage principal and interest payments for most homeowners.

As if the above is not bad enough, the mayor initially justified new development fees as a means to pay for infrastructure. Yet Winnipeggers heard, following the mayor’s meeting with the development community Monday, a reluctant admission the new revenues would also be used for general budget purposes.

So what then is the real rationale for these fees? Is it to fund infrastructure, or raise taxes on the backs of 2,000 families?

Our industry, which builds, maintains and rehabilitates the infrastructure in Winnipeg, could easily stay silent in this discussion. If all new revenue from these fees were to augment existing infrastructure budget dollars, we would presumably benefit by more work.

But we cannot.

We are residents, taxpayers, employers, neighbours, parents and community members no less interested than any other resident in wanting our city and province to grow by investment and sound public policy.

What is proposed is no substitute for a full and comprehensive review, as called for in the 2011 IFC report that advocated a shared, balanced and staged-in approach.

What is proposed runs afoul of sound public and tax policy. It is not worthy of council’s consideration and should be rejected outright.

We deserve better governance.

We again call upon the mayor and council to press the provincial government to undertake a comprehensive review of how we fund municipal infrastructure, to strike a shared arrangement with Winnipeg and all municipal governments.

History has shown piecemeal tax policy doesn’t work.

The mayor and council need to do the right thing, the right way.

 

Chris Lorenc is president of the Manitoba Heavy Construction Association and Western Canada Roadbuilders and Heavy Construction Association.

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