With the arrival of budget time across the Pontiac, many municipalities and the MRC have reportedly been put under strain to balance their budgets. The recent increase in inflation across the economy and the prospect of a looming recession make maintaining services while simultaneously keeping property taxes at an affordable level a challenge for many of the small municipalities across the region.
The difficulty for municipalities, and by extension the MRC, is that their primary tool to raise revenue is from property taxes from residents and businesses. Trying to keep taxes low while balancing the real need to fund services is an unenviable task.
While municipalities and the MRC can rely on grants from the province to a degree, these instruments for funding are unreliable. The provincial government may be generous one year, but the next may decide to cut back. Fines and service fees are another way municipal governments can raise money, but these can be even more unpopular than taxes if they become excessive.
In many ways municipalities are kept on a knife’s edge due to precarious funding.
While waste surely exists, by and large, we need services from the local government, otherwise who’s going to plow the roads, fill potholes, collect garbage, keep the water flowing, the toilets flushing and the arenas operating?
Cutting expenses and skimping on maintenance may seem like a prudent thing to do in the short term, but that could just as easily ensure higher costs in the future. The irony of austerity is that it often costs more money to fix something broken that you neglected than it would have if you just maintained it in the first place.
Property taxes are the only reliable tool governments have to fund vital services, however one that they are loath to use due to the almost inherent unpopularity of taxation.
And beyond the unpopularity, Pontiacers in precarious work situations or seniors on fixed income may just not be able to afford property increases. Many residents have or will see an increase in their bill even if the municipality kept the mill rates the same, just because their property value, and therefore their assessment, has increased.
The MRC recently passed a resolution in support of a request from other Quebec MRCs asking the provincial government to expand their ability to raise revenue. While the specific powers requested are unspecified, it’s hard to imagine the efficiency of MRCs setting up parallel income or sales tax infrastructure, for example.
Reforming taxation on a larger scale is probably smarter, but is inherently complicated due to the fact that a tax system split over three jurisdictions is unwieldy.
Some solutions to municipal taxation woes could look like the following.
Provinces could guarantee a certain level of funding to municipalities on an annual basis as one solution, though how to really lock in that guarantee in a world with so much economic uncertainty is an open question.
Reforms at the local and provincial level to try to make property taxes more progressive, in the sense that those who can actually afford to pay for increases contribute while protecting those who may be on a fixed or low income who just happen to live on property that spiked in value is another solution. Though again this is easier said than done as how to assess someone’s ability to pay would be complicated, especially at the MRC level.
Reducing federal and provincial sales taxes on essential items or income taxes on people with low incomes would help cushion the blow of property tax increases. On the other hand that would reduce provincial and federal revenue and likely would not be a long term solution baring a comprehensive reformation of the tax system.
All of this is to say that running a municipal budget given the constraints of mainly relying on one source of reliable income is hard work.
The most direct solution to tax woes is to encourage greater engagement amoung citizens to engage with their municipal government so they can see where their money is going. This would, amoung other things, help ensure accountability when funds are wasted or misappropriated. Maybe through understanding where money is going and the costs involved in towns providing a certain standard of living, taxes wouldn’t be seen as such an imposition to those who can afford it. We’re all in this together after all.
Brett Thoms
