Cities Are Not Created Equal

Transcription

1 Cities Are Not Created Equal A look at differences in how cities tax residents and businesses. Prepared by: CAO Secretariat and Corporate Finance Updated September

2 $1,400 $1,300 Winnipeg Residential Municipal Property Tax (1990 to 2002) to to yr yr old old 3 bedroom bungalow Projected $1,200 $1,100 $1,000 $900 $800 $700 $600 $ Winnipeg 1,122 1,184 1,194 1,253 1,321 1,313 1,316 1,344 1,350 1,353 1,287 1,261 1,236 Source: 1990 to 2000 data from City of Edmonton Property Tax Survey 2001 & 2002 calculated by City of Winnipeg using known 2% decreases 2

3 $1,400 Winnipeg Residential Municipal Property Tax (1990 to 2002) to to yr yr old old 3 bedroom bungalow Adjusted to 1990 constant dollars (factored out inflation) $1,300 $1,200 $1,100 $1,000 Projected $900 $800 $700 $600 $ $ 1,122 1,126 1,119 1,143 1,189 1,150 1,129 1,129 1,119 1,100 1, Source: 1990 to 2000 data from City of Edmonton Property Tax Survey 2001 & 2002 calculated by City of Winnipeg using known 2% decreases 3

4 $2,500 $2,000 $1,500 $1,000 $500 $0 Municipal Property Tax Bungalow 1,200 sq ft, 3 bedroom Calgary Area Edmonton Area Vancouver Area Regina Winnipeg Kitchener London Halifax Brampton St. Catharines Hamilton Toronto Area Windsor Mississauga Ottawa Source: City of Winnipeg, CAO Secretariat, January 2002 Derived from Royal LePage s Survey of Canadian House Prices, Jul-Sep Saskatoon

5 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Municipal Property Tax Standard Two-Storey 1,500 sq ft, 3 bedroom 5 Saskatoon Vancouver Area Winnipeg Edmonton Area Regina St. Catharines Hamilton London Windsor Kitchener Brampton Halifax Toronto Area Mississauga Ottawa Source: City of Winnipeg, CAO Secretariat, January 2002 Derived from Royal LePage s Survey of Canadian House Prices, Jul-Sep 2001 Calgary Area

6 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Municipal Property Tax Executive Two-Storey 2,000 sq ft, 4 bedroom 6 Saskatoon Vancouver Area Edmonton Area Regina Winnipeg London Kitchener St. Catharines Mississauga Hamilton Toronto Area Brampton Halifax Ottawa Windsor Calgary Area Source: City of Winnipeg, CAO Secretariat, January 2002 Derived from Royal LePage s Survey of Canadian House Prices, Jul-Sep 2001

7 Comparison of Cities Budget Winnipeg Edmonton Edmonton Calgary 1999 to 2002 Budgets For 2002: Edmonton & Calgary preliminary budgets January

8 Cities & Population: Introduction Budget Comparison Winnipeg Edmonton Calgary , , , , , , , , , , , ,000 Challenge: High level comparison of sources of revenue and principal service expenditures. Attempts to compare basket of similar services. Limitations: Service levels and scope of activities within services may differ between cities. Basket of Public Service Areas: Police; Fire; Ambulance; Libraries; Community Services including parks & rec; Planning, Development & Real Estate; Transit; Roads; land drainage; Solid Waste (col & disp). Services not included: Water Utility; Sewer Utility; Electric Utility; social services & health contribution to Province. Restated Budget: Winnipeg budget was significantly restated in order to match Calgary and Edmonton budgets. 8

9 Total Revenue per Capita Winnipeg collects less total revenue on a per capita basis than Edmonton and Calgary. $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 As Dollars Per Capita $1,197 $1,414 $1,339 Wpg Edm Cal 1999 $1,145 $1,254 $1, $1,152 $1,280 $1, $1,164 $1,384 $1, $1,197 $1,414 $1,339 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan

10 Property Tax With property tax reductions over the last several years, on a per capita basis, Winnipeg now collects less total property tax revenue than Edmonton and Calgary. 10

11 Reliance on Property Tax As % of Total Budget As Dollars Per Capita 50% 40% 45.4% 40.1% 41.8% $600 $500 $544 $567 $560 30% $400 $300 20% $200 10% $100 0% Wpg Edm Cal % 40.1% 40.4% % 40.0% 41.1% % 39.5% 38.4% % 40.1% 41.8% Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan 2002 $0 Wpg Edm Cal 1999 $566 $503 $ $553 $512 $ $544 $547 $ $544 $567 $560 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan 2002 NOTE: Winnipeg, change in accounting practice, 2002 budget estimates for property taxes from homes built during year. In previous years, not budgeted for, revenue went directly into reserve. Thus 2% cut does not show up clearly. 11

12 Revenue per capita Property Tax Government Grants (Op & Cap) User Fees, Licences & Fines From Utilities Business Tax Invest Inc, Reserves & Other Winnipeg Edmonton Calgary $0 $100 $200 $300 $400 $500 $600 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan 2002 Winnipeg collects slightly less amounts in property taxation. Big difference in revenue from user fees and utilities (private & city owned) utilities: Wpg $69 M Edm $198 M Cal $194 M 12

13 Total Expenditures Winnipeg spends the least on a per capita basis. In 2002, Edmonton: 18% more Calgary: 12% more. Significant change from 1999, Edmonton: 10% more Calgary: 4% more. $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 As Dollars Per Capita $1,197 $1,414 $1,339 Wpg Edm Cal 1999 $1,145 $1,254 $1, $1,152 $1,280 $1, $1,164 $1,384 $1, $1,197 $1,414 $1,339 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan

14 Expenditures on Principal Public Services For direct expenditures on principal public services, Winnipeg spends the least on a per capita basis. In 2002, Edmonton: Calgary: 32% more 16% more. Significant change from 1999, Edmonton: 19% more Calgary: 12% more. Police; Fire; Ambulance; Libraries; Community Services including parks & rec; Planning, Development & Real Estate; Transit; Roads; Solid Waste; and Land Drainage. $1,200 $1,000 $800 $600 $400 $200 $0 As Dollars Per Capita $774 $1,021 Wpg Edm Cal 1999 $720 $854 $ $732 $897 $ $750 $959 $ $774 $1,021 $900 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan 2002 $900 14

15 $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Gross Expenditures per capita Winnipeg Edmonton Calgary Police Fire Paramedics Libraries Com. Ser & Parks & Rec Plan, Dev & Real Estate Transit Roads Solid Waste Land Drainage Ext Debt Cap Fin Pay as You Go All Other Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan

16 Residential vs Commercial Taxation How other cities tax business Updated July 2002 Compiled by: City of Winnipeg - CAO Secretariat 16

17 Which Large City has a Business Tax Business Tax Several cities have Vancouver No recently replaced Edmonton Yes their business tax Calgary Yes with additional Saskatoon No commercial Regina No property taxation. Winnipeg Yes Hamilton No In 1998 the Ontario government Mississauga No Toronto No Ottawa No Montreal Yes introduced legislation which resulted in cities replacing their business tax revenue with harmonized non-residential property tax mill rates. 17

18 Ratio of Property Tax Rates Commercial to Residential Van Edm Cal Saskt Reg Wpg Ham Miss Tor Ott Mont Que com/res Source: City of Winnipeg, CAO Secretariat, July 2002 Other cities have differential mill rates. Calgary taxes its commercial properties at a rate 3.1 times more than its residential prop. Vancouver: 4.9 times more. Winnipeg: 1.4 times more. 18

19 Ratio of Property Tax Rates Industrial to Residential Van Edm Cal Saskt Reg Wpg Ham Miss Tor Ott Mont Que com/res Some cities have a higher differential tax rate for industrial properties. Ind to Res Ratio: Vancouver: 9.5 times more. Ontario cities: 1.7 to 5.3 times more. Source: City of Winnipeg, CAO Secretariat, July

20 100% % Distribution of Property & Business Tax Revenues for Residential and Non-Residential Residential Prop Tax 80% 60% 40% 20% 0% 58% 42% 51% 31% Business Tax 17% 22% 14% 17% 33% 39% 39% 33% 67% 38% 62% Non-Res Prop Tax 55% 36% 64% 30% 70% 43% 57% 45% 55% 36% 47% Van Edm Cal Saskt Reg Wpg Ham Miss Tor Ott Mont Source: City of Winnipeg, CAO Secretariat, July 2002 Winnipeg has a lower reliance on commercial /business taxation as compared to the other large western cities. Vancouver & Calgary rely on 58% and 61% of their tax revenues coming from businesses. -- Winnipeg is at 45%. This results in Winnipeg having lower taxes for business but higher residential property taxes than some other cities. 20

21 Distribution of Assessment Valuation for Residential and Non-Residential 100% 80% 60% 40% 20% 0% Residential Non-Residential 24% 25% 24% 25% 23% 29% 16% 26% 22% 19% 34% 76% 75% 76% 75% 77% 71% 84% 74% 78% 81% 66% Van Edm Cal Saskt Reg Wpg Ham Mis Tor Ott Mont Source: City of Winnipeg, CAO Secretariat, July 2002 The mix of residential to non-residential property value is similar in most Canadian cities. In other words the mix of our tax bases are nearly identical! The average of these 11 cities: res 76% non-res 24% 21

22 Total Property & Business Tax Revenues Combined as % of Total Budget 70% 60% 50% 40% 30% 20% With property tax reductions over the last several years, in 2002, Winnipeg at 55% no longer overly relies on taxation as compared to other cities. 10% 0% Van Edm Cal Saskt Reg Wpg Ham Mis Tor Ott Mont % 65% 48% 54% 61% 59% 55% 56% 60% 45% 61% 66% Source: City of Winnipeg, CAO Secretariat, July 2002 Budget data for Cal, Edm, and Wpg are from City Budget Comparison study which restated financial data for comparison purposes. Note: Services provided by cities vary. Many Eastern cities provide many social needs services such as welfare, daycares, shelters etc. 22

23 Tax Revenues & Total Revenues $800 $700 $600 $500 $400 $300 $200 $100 $0 Total Prop & Bus Tax Revenue As Dollars Per Capita $643 $681 Wpg Edm Cal 1999 $652 $606 $ $640 $617 $ $638 $655 $ $643 $681 $718 $718 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan 2002 On a per capita basis, Winnipeg has both lower tax revenues as well as lower total revenues than Edmonton & Calgary. $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Total Revenue As Dollars Per Capita $1,197 $1,414 $1,339 Wpg Edm Cal 1999 $1,145 $1,254 $1, $1,152 $1,280 $1, $1,164 $1,384 $1, $1,197 $1,414 $1,339 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan

24 Combined Commercial & Business Tax Bills $60,000 $50,000 $40,000 PRELIMINARY There is evidence that Winnipeg has lower taxes on business than Cal & Edm. $30,000 $20,000 Warehouse Warehouse Strip Strip Retail Retail Mall Mall Convenience Convenience Store Store $10,000 $0 Wpg Edm Cal Wpg Edm Cal Wpg Edm Cal $ 36,275 47,740 57,646 37,560 46,048 43,030 7,138 7,016 12,588 Source: City of Winnipeg, CAO Secretariat & Corporate Finance Dept, Jan Sample properties & tax amounts provided by the Cities of Edmonton and Calgary. For Edmonton used average of range provided. 24

25 What If.. Cities have different revenue structures and thus have different reliance on the various sources of revenue: Property tax Business tax User fees, licenses and fines Revenue from utilities Provincial government grants The following slides examines what would happen to Winnipeg s residential property taxes if we had a similar revenue structure as the City of Calgary. The slides are meant to illustrate that Winnipeg has a significantly different revenue structure when compared to Calgary. Royal LePage house price and property tax survey is used for comparative purposes. 25

26 WHAT IF Winnipeg had the same commercial to residential tax rate ratio as Calgary? 3.1 : 1 ratio com to res Wpg property taxes (city): For bedroom bungalow: $940 Wpg median residential home: $655 $2,500 $2,000 $1,500 $1,000 $500 $0 Saskatoon Calgary Municipal Municipal property property taxes taxes on on 1,200 1,200 sq sq ft, ft, 3 bedroom bedroom bungalow bungalow Wpg Wpg market market value value of of $122,600 $122,600 Winnipeg What If Wpg What If Edmonton Vancouver Regina $1,387 Source: Royal LePage s Survey of Canadian House Prices, Jul-Sep 2001, City of Winnipeg, CAO Secretariat derived city averages for house prices and total property taxes, as well as, the split in Municipal/Education property taxes. What if calculated by the City of Winnipeg using 2002 budget information. July 2002 Winnipeg Kitchener London Halifax Brampton St. Cathar... Hamilton Toronto Windsor Mississauga Ottawa 26

27 WHAT IF Winnipeg had the same user fees, licenses & fines revenues per capita as Calgary? City would acquire an additional $39 million in user fees. Wpg property taxes (city): For bedroom bungalow: $1,225 Wpg median residential home: $859 $2,500 $2,000 $1,500 $1,000 $500 $0 Saskatoon Calgary Winnipeg What If Edmonton Municipal Municipal property property taxes taxes on on 1,200 1,200 sq sq ft, ft, 3 bedroom bedroom bungalow bungalow Wpg Wpg market market value value of of $122,600 $122,600 Vancouver Regina Wpg What If $1,387 Source: Royal LePage s Survey of Canadian House Prices, Jul-Sep 2001, City of Winnipeg, CAO Secretariat derived city averages for house prices and total property taxes, as well as, the split in Municipal/Education property taxes. What if calculated by the City of Winnipeg using 2002 budget information. July 2002 Winnipeg Kitchener London Halifax Brampton St. Cathar... Hamilton Toronto Windsor Mississauga Ottawa 27

28 WHAT IF Winnipeg had the same utilities revenue per capita as Calgary? (city & non-city owned) City would acquire an additional $69 million from utilities. Wpg property taxes (city): For bedroom bungalow: $1,106 Wpg median residential home: $773 $2,500 $2,000 $1,500 $1,000 $500 $0 Saskatoon Winnipeg What If Calgary Edmonton Municipal Municipal property property taxes taxes on on 1,200 1,200 sq sq ft, ft, 3 bedroom bedroom bungalow bungalow Wpg Wpg market market value value of of $122,600 $122,600 Vancouver Wpg What If Regina $1,387 Source: Royal LePage s Survey of Canadian House Prices, Jul-Sep 2001, City of Winnipeg, CAO Secretariat derived city averages for house prices and total property taxes, as well as, the split in Municipal/Education property taxes. What if calculated by the City of Winnipeg using 2002 budget information. July 2002 Winnipeg Kitchener London Halifax Brampton St. Cathar... Hamilton Toronto Windsor Mississauga Ottawa 28

29 WHAT IF Winnipeg had same com to res tax rate ratio, user fees & utilities revenues per capita as Calgary? Combine all 3 Wpg property taxes (city): For bedroom bungalow: $651 Wpg median residential home: $449 $2,500 $2,000 $1,500 $1,000 $500 Municipal Municipal property property taxes taxes on on 1,200 1,200 sq sq ft, ft, 3 bedroom bedroom bungalow bungalow Wpg Wpg market market value value of of $122,600 $122,600 Winnipeg What If $1, to 1 ratio for com/res $0 property tax rate $39 M extra in user fees $69 M extra from utilities Wpg What If Saskatoon Calgary Edmonton Vancouver Source: Royal LePage s Survey of Canadian House Prices, Jul-Sep 2001, City of Winnipeg, CAO Secretariat derived city averages for house prices and total property taxes, as well as, the split in Municipal/Education property taxes. What if calculated by the City of Winnipeg using 2002 budget information. July 2002 Regina Winnipeg Kitchener London Halifax Brampton St. Cathar... Hamilton Toronto Windsor Mississauga Ottawa 29

30 Sources of Revenue: The Differences are Striking Property & Business Tax City of Winnipeg 54% 30% 16% User Fees, Licences, Fines, from Utilities & Other Government Grants Source: City of Winnipeg. Restated 2001 Budget: $ 0.75 Billion. Includes transit, solid waste disposal and provincial capital grants. User Fees & Other Resources Property Tax City of Phoenix 6% 23% 44% 27% Local Sales Tax State-Shared Revenues Source: City of Phoenix General Purpose Funds: $1.07 Billion. Similar set of services but also includes municipal courts (5%). 30