Yule Heibel's Post Studio © 2003-2014

Tax deadline coming up

I’ve put it off, but it’s due tomorrow (or Friday, after the Canada Day holiday on Thursday): property taxes.

There are some things I’m happy to get for my taxes.

But the state of those off-leash parks, with spear-grass (“the generic term used for any wild grass that has barbed seeds”) growing rampant and left flourishing, leaves me frustrated…

Not sure what can be done about it, though, short of using napalm or flame-throwers. If it’s mowed, but the seed residue is left on the ground (versus being bagged up as it’s mowed, and then taken away to be burned), it just blows around everywhere – and crops up in new places the next year.

Connect the dots: two articles by Miro Cernetig and Bob Ransford that should be read together

The Vancouver Sun published two articles, nearly back-to-back, which make a lot of sense when read in conjunction: on March 22, we read Bob Ransford’s As cities become more complex, our taxes keep rising and on March 24 we read Milo Cernetig’s Approach to social woes a moral failure by all three main B.C. parties.

These two articles have to be comprehended together. One (Ransford’s) wants people to understand the economics of taxation that underlie municipal finance, while the other (Cernetig’s) wants people to understand how a certain kind of underfunding has produced the horrible social problems we see in our (BC) cities today. Cernetig references Vancouver, but Victoria has similar problems.

I have for some months now picked up on the criticisms of municipal infrastructure funding in Canada — even going so far as to publish a short piece on Vibrant Victoria on Dec.3/07, Victoria’s Choice: to be or not to be …is not the question. The gist of Ransford’s article elaborates on the theme I also addressed in my piece: cities (in my opinion, Canadian cities especially, although Ransford argues that it’s a Western/ First World global problem) are too dependent on single sources of income, primarily property taxes, while so-called senior levels of government (state or provincial, and federal) receive funding from many diverse sources of income: consumption taxes, income taxes, and so on. At the same time, cities are in the front line of having to provide services on every level.

This is lunacy, especially when you take into account the fact that cities generate most of a nation’s economic activity and wealth, and that they also will typically attract the largest populations of people dependent on what is collectively referred to as “services”: supported housing, addiction treatment, food banks, welfare, etc. Poor people come to cities because this is where the services are. Very often, they are in a city’s downtown, which is why you’ll find neighbourhoods in downtowns that become magnets for the visibly needy.

The problem is that these services are underfunded or even non-existent, some having once been funded by one of the two senior levels of government, but now having been off- or downloaded to municipalities.

And there we are, connecting the dots.

The Feds “downloaded” to the Provinces those services that used to be Federally-funded. The Provinces in turn have downloaded Provincially-funded services to the municipalities.

And, …well, the municipalities have no one to download to …except us. And that, in a nutshell, is my argument: citizens — people who live in cities — are shouldering the downloaded costs of all the stuff that all the other levels of government, including the municipalities, used to handle. Beggars on the streets; addicts shooting up in broad daylight; mentally ill people freaking out on corners; homeless people in every nook and cranny of public and private spaces; human feces on the sidewalks and in doorways; used needles in parks and on sidewalks; drug deals transacted openly on downtown streets… The list goes on.

The police refer to the mentally ill who openly use illegal drugs and defecate on the street and sleep in doorways as their “clients.” It seems to have gone by the board that the police shouldn’t be dealing with people on that end of the spectrum of social disorder in the first place — the police should be dealing with criminals and with law enforcement. When the people on that end of the spectrum engage in criminal activity — and they do, because they steal to stay alive and to feed their addictions — the police act like social workers …because that’s the role that has been downloaded to them, too.

Criminals exploit this.

My neighbours, who came home at 11pm on a recent weekend night to find that their basement door had been kicked in by thieves while they were away, thieves who robbed them of various items and who apparently fled just as the family returned home, had to wait for over 12 hours before the police could come over. And why was that? Perhaps they were too busy taking care of “clients”…

We — citizens — are the bottom of the food chain in this story. We — citizens — are the last link to off- or download to. We — citizens — are supposed to feel guilty if we don’t express or display the appropriate level of compassion toward the marginalized. But the citizen might ask herself, “Whatever happened to the idea that I pay my taxes, and that they pay for services intended to ameliorate these conditions?” The citizen still pays her taxes — and pays and pays and pays, if she lives in Canada — and the senior levels of government boast of surpluses. The municipalities, meanwhile, relying almost solely on the property taxes she and the many other citizens in the urban area pay, find themselves shouldering the cost of upgrading ancient infrastructure (sewage, roads, parks, recreation centres, etc.), plus the cost of “helping” the growing pool of service seekers.

But there are no provincial mental hospitals anymore, there is no affordable housing or supportive housing being built by the province or the feds, and all the damage that accrues from this out-casting has been downloaded to Joe and Jane Schmuck, i.e., you and me Citizen Jim and Citizen Jill.

That’s the dot.

Let me just present a couple of extract from the above-mentioned articles. Here’s Ransford:

Am I getting value for dollar for the property taxes I pay to local government? Politicians and bureaucrats at city hall would argue that I am getting more for my dollar than I ever have. Despite the fact that the number of employees at my city hall has grown faster than the rate of local population growth, the people that work there will tell you they are doing much more with fewer resources.

The fact is that cities across the country have become much more complex organizations than they were in the past and they have taken on more and more responsibilities. The federal and provincial governments have downloaded a long list of responsibilities on municipal governments. They have also stopped doing things that they once did as governments and the municipalities have stepped in and taken over where a need had to be met.

Social or non-market housing is a good example. Providing housing for the truly needy used to be almost the sole responsibility of the federal government. They started backing out of this area in the late 1980s and have next to no involvement today in funding what most are identifying is a desperate social need in our urban centres
(…)

The role of municipal governments has evolved. No longer do you look to your municipality merely to fix the potholes in the road in front of your house or to build and maintain the pipes that dispose of the sewage when you flush your toilet..

As Ransford points out (on page 2 of the article), a key problem here is aging populations:

The concept of a tax tied to the value of your home is beginning to make less practical sense with an aging urban population that will soon be dominated by retirees on fixed retirement incomes with all of their equity tied up in relatively expensive homes.

There’s only one kind of civic taxpayer and one source of civic revenue. There is a looming danger that taxpayer will soon no longer be able to fund the full cost of what it takes to run a city.

I would further add to Ransford’s excellent summing-up that Victoria’s troubles are uniquely compounded by our balkanized political system, which splits Victoria into many separate un-amalgamated municipalities (the Capital Regional District, which is all of Victoria, is 13 municipalities, each with its own mayor and council, fire chief, police department, and so on). At the same time, the City of Victoria holds the region’s downtown, the place where everyone comes for services — social services that range from food banks, charities, needle “exchanges,” and plain old week-end partying — many of which require policing and various levels of clean-up. Who pays? The City of Victoria, not the surrounding municipalities, which merely take advantage of what the City offers.

Let’s look at Milo Cernetig’s article now. He gets a gold star (in my book) for slamming all the BC provincial parties — too often and for too long, the problems we’re facing have been presented in partisan terms: it’s the BC Liberals’ fault (note to non-BC readers: the BC Liberals are sort of neo-conservative, and have little in common with the Federal Liberals); or it’s the NDP’s fault, and so on. Yadda yadda yadda. Blah blah blah.

Forget about it. That partisan shit has to stop, because it’s obvious that none of the parties have covered themselves in glory here, and that whole partisan shtick is old beyond words.

Here are some excerpts from Cernetig’s piece:

…here’s the fast-rewind of the amazing arc of policy blunders — given to us by a melange of Social Credit, New Democratic and Liberal governments — that I tried to explain.

First, imagine progressively shrinking the province’s major psychiatric hospital, Riverview, to save money. Then, in a cruel twist, offer no safe harbour for many of those psychiatric patients, who politicians told us would benefit from being “deinstitutionalized” and put back into society.

Instead, let large numbers of these truly desperate souls fend for themselves on our streets. Let them line up for a room in those bedbug-infested flophouses our health inspectors, for reasons that mystify, somehow allow to stay open. While we’re at it, we’ll also slow down the construction of new social housing, too, since it’s too expensive.

(…)
So now we’ve got all these lost souls begging and wandering the city’s downtown, often in a schizophrenic or crystal meth haze.

But we really haven’t done much about it. We’re not good at the tough job of distinguishing between vagrants (who should be moved on by the cops), or chronic criminals (who should be put in jail by judges) and the truly sick (who should be taken to shelters or hospitals by good beat cops, if we had enough of them).

Nope. We somehow got used to the sight of people sprawled on sidewalks and inside the doorways of the world’s “most livable” city.

There it is: another dot: We somehow got used to the sight of people sprawled on sidewalks and inside the doorways of the world’s “most livable” city.

The “somehow” in that sentence is “downloading.” We have been worn down by senior levels of government absenting themselves from the business of governing (a big piece of which includes providing services in exchange for all the money we fork over), and in the British tradition (within which we exist here), we have taken it uncomplainingly up the rear end, “muddling through” and accepting it all as if it were an inevitability.

That’s why we put up with the sight of what Cernetig describes, put up with open drug use, criminal transactions in plain daylight, and lunatics on our streets. In the British tradition, we are, after all, but subjects of these governments, not its master. Just as every level has downloaded — until there’s no one left to download to except to you and me, so every level absolves itself of accountability, because of course there’s always a higher level to defer to. In the last instance, the senior levels can defer to “the Crown,” a cruel joke referencing Canadian impotence.

The emancipation of Canadian cities is a project so inextricably tied to emancipation from old ways of tutelage and subjugation that it will amount to a revolution if it is ever to happen.

Unfortunately, since there has never been a Canadian revolution, I don’t hold out much hope for the emancipation / empowerment of Canadian cities. Perhaps — counter to my current pessimism — we’ll eventually strike some sort of paternalistic bargain with the “higher” levels of government after all. Since they hold the power already, they might grok the problem and step up, if only to maintain their hold.

At this point, I almost don’t care as long as the downloading stops.

Photograph by Ian Lindsay, from Milo Cernetig’s article.

The caption reads “A homeless person sleeps on a Cordova Street sidewalk in February. Figures show that investing in social housing would save B.C. $211 million annually.”

More thoughts on economic development, land use, zoning, quality of life…

…courtesy of further reading in Robert L. Bish’s Local Government Organization in the Capital Region (and continuing somewhat from yesterday‘s entry).

Bish is concerned with explaining the need for and importance of economic development in the region, which is a necessity for Victoria since it relies for over half of its property tax revenue on businesses, and which is necessary “if children of citizens already here are going to have challenging job opportunities in the region instead of having to migrate elsewhere.”(p.30)

What I find especially useful is how Bish explains the linkages between land use/ zoning regulations, coupled with other restrictive regulations, which together can conspire to retard economic development. Bish writes that the following factors influence economic development: “quality of local services, especially transportation and public safety, the regulatory structure, especially zoning and land use regulation, taxes and (indirectly for business owners and their employees) schools and the attractiveness of residential neighbourhoods. These are primarily manageable by smaller local governments except for taxes, where provincial and national government policies also play a role.” (p.25)

We could say that many of these relate to “quality of life” issues. But zoning regulations directly impinge on economic development, which certainly influences quality of life. As Bish puts it,

First, many municipalities in the capital region have the practice of zoning most land into its existing use–and to do so some have hundreds of zoning categories. This means that every significant change in a business land or building use requires a rezoning process, which not only adds time and cost to the process but creates considerable uncertainty with the politics of the rezoning. Several municipalities also have very strong policies against any kind of home based business. These policies on zoning and home based businesses may have a benefit of providing community input on every land use change but they are policies that make business creation, change and expansion more costly. These policies, however, do not require a regional government to change. They do not even require that all municipalities have more business friendly land use policies. They are, however, important enough to merit review in the region if economic development is to be promoted. (emphasis added) (p.25)

Not a week goes by that a resident doesn’t rant in a letter to the editor or at a neighbourhood association meeting about the”evils” of “spot rezoning.” Council is accused of bending over backward for developers, being spineless, selling the “community” out, etc. Yet as Bish points out, the need for rezoning is built into the very fabric as it exists. If you don’t rezone (call it spot rezoning or whatever), you will ossify land use — and retard economic development.

Bish continues:

The second area where individual municipalities play an important role is in their setting of variable tax rates. The B.C. municipal practice of setting business tax rates two or more times higher than residential tax rates (in the capital region the average multiple is 2.76) has made property taxes for businesses in B.C. some of the highest in North America, while residents enjoy some of the lowest property tax rates. Of course one should not be terribly surprised at this result as there are many more residential voters than business voters. That does not make the problem go away, however, and when combined with close to the highest marginal income tax rates in North America, high corporate income taxes and a capital tax, the capital region is not a tax friendly environment for businesses employing skilled professionals. Most of these tax disadvantages are beyond municipal control, but that makes it even more important that municipal governments fix those policies they are responsible for in areas of land use and local business regulation. It also makes it important that the capital region advertise its strongest asset: a diverse range of small municipalities providing attractive options for different lifestyles in a beautiful environment. This is the quality that may offset high provincial taxes to attract the high income professionals that businesses require to the region. (emph. added) (p.26)

Again, clearly it’s the council’s job to create favourable conditions for economic development, yet when they do (and are called to the mat for “spot rezoning”), some people complain how they’re “favouring” developers, and they usually pipe up (and puff up) enough to convince others, who follow the piper. It seems that many people don’t understand that we can’t live off lotus leaves — we have the “strongest assets,” but we also need to attract more vibrant businesses that can pay better wages than the hospitality or service industries pay.

Victoria is now in significant trouble because our downtown is overrun by people who are not “just” homeless, but who openly use and deal in drugs, who shoot up, smoke crack, tweak in broad day light, and make a career of begging for “spare change.” Key areas are festooned with groups of a dozen or so, many with (stolen) shopping carts laden with various possessions. The Province closed mental health facilities years ago, kicked people out, and seems willing to provide free needles (and now free pipes to crack smokers), but cannot find the will to fund detox facilities or asylums, nor is the justice system willing to stop the revolving door model we use for criminals (thieves, dealers) here.

In other words, the Province “downloaded” the responsibility for the mentally ill and the addicted to the municipalities, which don’t have the wherewithal to deal with this huge issue. So, in turn, the municipality has effectively “downloaded” this problem to individual citizens — not only in the sense that we are supposed to step up with private donations (and private resignation), but also in the sense that our shared public spaces are in part thoroughly destroyed. The private individual is suffering the costs of this “downloading.”

And it, in turn, is destroying what Bish calls our — downtown Victoria’s — “strongest assets,” one of which our own ability to believe in this place.

“Show, don’t tell”: what municipal government can learn from good fiction

Local Government Organization in the Capital Region is the name of a very useful 35-page report written in 1999 by Dr. Robert L. Bish, Professor Emeritus at the University of Victoria. Bish effectively argues against amalgamation (what other places call the unicity concept, municipal reform, or consolidation movements), and show that generally, the process doesn’t save money and actually often ends up costing tax payers more. He has some interesting things to say about what scales, economically, and what doesn’t — and how this affects quality, too.

What’s so valuable about Bish is his international perspective — he’s originally from the US (California, Indiana, Washington, Maryland), taught at UVic from 1981 until the late 90s, and now, in retirement, lives in Port Townsend, WA (according to his webpage). I was particularly intrigued by another of his texts, also on his webpage, which explains funding structures in US cities (see Local Government Finance Issues in the United States, 2002).

He argues that property and business taxes are good insofar as they bond the municipal government (and its expenditures) to the residents. Any tax that becomes some sort of abstraction — where the tax payer no longer has any idea what his taxes are actually funding — contributes to what I would describe as a democracy deficit. People complain, but generally turn off, tune out, don’t care (except on some general level). Bish appears to be an advocate of a more immersive democracy, where voters care deeply about how their money is spent because (1) they know it’s their money (from their property or business taxes) and (2) they can see how the money is being spent (because it’s being spent locally, by governments they elected and whose members remain accessible to the public).

Bish also points out, of course, that US cities (particularly since the mid-90s) have many more taxation tools at their disposal than Canadian cities (which, he doesn’t say outright, are merely “creatures of the Provinces,” lacking the autonomy they deserve — which in turn also creates a democracy deficit, since we’re under tutelage to senior levels of government). Among those tools are the ones that I would advocate for, namely a direct share of both sales taxes (in Canada, that would be PST and GST) and income taxes, since both of these are linked to the economy much more closely than property taxes are.

But that’s the very reason why reliance (over-reliance?) on these is a bad idea, according to Bish. In economic good times, cities get used to having the added cash, but when there’s a bust or a recession, they’re left scrambling. Ok, I get that. But to my mind that still doesn’t mean that cities shouldn’t be able to collect some part of these taxes directly, perhaps not by municipality but by region (what in the US might be called counties, and what we have here in the form of the CRD, the Capital Regional District).

Returning to the topic of amalgamation, one of his arguments against it should be heeded by Victoria in particular. In the 1999 document cited above, Local Government Organization in the Capital Region, he points out that the City of Victoria gets around 52.5% of its property tax revenue from businesses, which is a considerably higher percentage than the other surrounding municipalities. Victoria has more businesses because it is a “core” or “central city” for the rest of the region — which is exactly the argument the city now uses when it asks other municipalities to chip in some money to help with policing the downtown — except it’s not clear what the others would get in return.

The leadership can’t seem to communicate that effectively, or, more importantly, show what we’d get. Perhaps running a city government is like writing compelling fiction, where authors take the directive “show, don’t tell” to heart.

Municipalities like Oak Bay are the first to protest loudly against amalgamation, claiming that Victoria wastes money (it does not) and is a basket case (it isn’t), and that amalgamation would therefore hurt …Oak Bay.

But it cuts both ways, as Bish points out. In fact, in his view, Victoria could well be the loser under amalgamation:

There does not appear to have been a study of the costs and benefits to the City of Victoria of its core city position, and while it is not unusual for central cities to claim that they are exploited by suburbanites who come into the city, there is yet to be a case where the city government and city businesses thought that they would be fiscally better off if the suburbanites stayed away. (p.21)

… because of course, if you’re relying so strongly on business taxes, and the suburbanites are obviously coming downtown to do business, whether it’s to shop or to eat at restaurants or to use services, you don’t want them to stay away.

Most pause-provoking, however, is this:

The impact of amalgamation on core city finances can be very important unless taxes are related to benefits in decentralized sub areas. This is because it generally costs more to provide equivalent services in spread out residential areas than in denser areas. Thus, any financing of services over the entire region will spread the central city business tax base over the entire region instead of leaving it to finance services in the core city. In fact, one of the most recent criticisms of geographically large municipalities, such as have been created in the Southwest of the United States, is specifically that the wealth of downtown business is used to subsidize the cost of residential services in outer areas, to the detriment of preserving the core area. This is something that is not happening in the capital region because each municipality must pay for its own services from its own tax base and CRD expenditures for regional activities are only a small proportion of overall property tax revenues. It is surprising that advocates of amalgamation do not seem to have been paying attention to this issue. (p.23)

That’s a pretty good argument against amalgamation, if, that is, one is talking about amalgamating all the municipalities under the CRD (some of which are quite rural). I agree with Bish here, but I wonder if things haven’t changed enough to warrant an amalgamation between the four core municipalities — if only to give all four a vote in matters pertaining to “our” downtown. As I pointed out in the previous entry, at present we’re dependent on the City of Victoria voter base for policies that affect the “core city” — that is, the core or central city for the region. If it’s a regional city, however, shouldn’t those other citizens have a voice in shaping it? Perhaps outright amalgamation isn’t the answer — after reading Bish’s report, I have a better understanding of the CRD’s role, although I don’t understand it enough to know how structures could be built that allow those councilors from those other three core communities to have more of a say in matters that affect primarily only one core municipality, namely the city.

Bish is also a great fan it seems of what he terms easy entry for new governments, by which he means that anyone with even very modest means (a few hundred dollars) can take a run at a council seat. Basically, I agree with him, but here, too, the issue cuts both ways. I attended a number of the 2005 “candidates meetings” and they were often an out and out goon show. It’s scary to see who thinks they can run for office — that “easy entry” aspect makes it …well, easy for anyone to take a crack at it.

Sure, it’s sublimely entertaining at the “meet the candidates” events, but running a city on pet peeves isn’t my idea of good government. And when you pay councilors $25,000, or the mayor $74,000 (plus expenses) for work that typically stretches into 12+ hour days, you won’t get leaders from other fields clamoring to take the job on. They’ll stay where they are, leaving this field to the Don Quixotes. That’s a gross and unfair generalization, of course, and often enough Don Quixote doesn’t get elected, and typically there are enough good candidates running to fill the seats, and we have hard-working, good people on council, …but still. In an ideal world, you’d get leaders from other, related, walks of life to take the job on — they’d have to be people whose days are 48 hours long so they could accomodate running the city as practically a volunteer commitment, while they continue to run their other affairs, too.

And that’s a work of fiction yet to be written.

“Victoria’s choice”: my foray into critiquing municipal infrastructure funding

It’s up — my second article is up on the Vibrant Victoria website.

It’s called Victoria’s Choice: to be or not to be …is not the question. While it’s about the problem of municipal infrastructure funding in Canada generally, I try to address specifically the situation in Victoria. That is, Victoria’s choice not “to be or not to be” a city, because we obviously are a city, irrespective of those who’d prefer a Potemkin Village of tourist or retirement fantasy. Our choice is more serious: whether to be a failing or a successful city.

Read the article here; feedback (if any) could appear on Vibrant Victoria’s forum page, on this thread.

Could culture marketing go into overdrive?

This could get tricky or messy or both. CEOs for Cities’ blog entry, To Tax or Not to Tax?, shines a light on the (potential?) problem of non-profit organizations having tax-exempt status. In the US, collectively over 23 cities, non-profits represent ~$1.5b in “lost” tax revenue, according to the Chronicle of Philanthropy.

CEOs for Cities writes:

Universities, hospitals, museums and other nonprofits are generally exempt from taxes, most notably property taxes. These exemptions in 23 cities, according to a survey by The Chronicle of Philanthropy, amount to $1.5 billion.

The biggest exemptions are in NYC, Boston, LA, DC, Houston and Philadelphia. But the biggest impacts are in Denver, Baltimore, San Diego and Memphis.

Most exemptions go to universities and hospitals in exchange for the public good they are expected to provide. But the pressure on city budgets continues to grow, so pressure is increasing on nonprofits to pay something for the city services they require (or for the land they take out of circulation that could yield property tax).

Clearly, not all nonprofits are created equal. Some hospitals, for instance, serve more indigent patients than other hospitals. We may be moving to a time when cities will demand that nonprofits exempt from property taxes account for the value of the public service they actually provide, as well of the cost of public services they use.

The really far-reaching idea is that cities might eventually “demand that nonprofits exempt from property taxes account for the value of the public service they actually provide, as well of the cost of public services they use.”

Obviously, that’s possible to do — to an extent. But it will be a nasty food fight all around when it comes time to determine the dollar amounts of “intangibles” provided by cultural non-profits.

I can just imagine it… “Our art exhibit/ music performance/ theatre piece provides mental stimulation, keeps people off drugs, and saves souls, therefore it’s worth x-amount of dollars,” says the pro-culture camp. The opposition, who don’t want “their” tax money to support the “useless” arts, counters, “Your cultural product drives people crazy, and far from providing a benefit, in fact adds to social costs.”

Well, maybe that’s a bit far-fetched, but trying to pin a price on everything and anything could get absurd pretty quickly. Just look at advertising, which wants us to pay the price (buy the product) — silly claims abound.