Frequently Asked Questions

Frequently Asked Questions

Frequently Asked Questions If my home value goes up, does the City get more taxes? Where do my property taxes go? What is the difference between Regional and City services? How are my municipal tax dollars spent? What are the City s funding sources? How do the City s taxes compare to other GTA municipalities? Why are City pressures higher than Consumer Price Index? How is new infrastructure funded and why is infrastructure replacement such a large issue? What is the City doing to ensure financial sustainability? What are the City s key priorities? What is the Hospital Capital Levy?

If my home value goes up, does the City get more taxes? The Municipal Property Assessment Corporation (MPAC), a not-for-profit corporation funded by all Ontario municipalities, will complete a 2012 re-assessment program for Ontario properties applicable to the 2013 tax year. It is important to note, this process is revenue neutral for Vaughan and it does not provide the City with any additional revenue. This is provincially mandated and achieved through tax rate adjustments to preserve the City s total levy. However, property changes above or below the municipal average will experience an assessment related tax adjustment. The chart below illustrates how the City s levy remains neutral. BEFORE RE-ASSESSMENT (SAMPLE) AFTER RE-ASSESSMENT (SAMPLE) Property Value Tax Rate Tax Rate Re-Assessed Value Value Incr. Adjusted Rate Tax Bill Change A 355,000 0.2462% 874 378,466 6.61% 0.2310% 874 0 B 450,000 0.2462% 1,108 495,000 10.00% 0.2310% 1,143 35 C 570,000 0.2462% 1,403 607,677 6.61% 0.2310% 1,404 0 D 530,000 0.2462% 1,305 454,900 3.00% 0.2310% 1,261 (44) E 375,000 0.2462% 923 397,500 6.00% 0.2310% 918 (5) F 630,000 0.2462% 1,551 677,250 7.50% 0.2310% 1,564 13 Total City Levey 7,165 7,165 (0) AVG. VALUES 485,000 516,965 6.62% (0) Increases in assessment values will be phased in over four years. Should homeowners disagree with the new assessment values, MPAC offers an informal process for assessment reconsideration. In addition, residents can appeal to the Assessment Review Board. More information on this process can be found at www.mpac.ca 2

Where do my property taxes go? The 2012 average total property tax bill in Vaughan, approximately $4,531, is allocated to York Region, School Boards, and the City of Vaughan. Although the City collects property taxes, it retains less than 30 percent. The chart below illustrates where your 2012 property taxes went. Residential Taxes Where Do Your 2012 Taxes Go? Education 23.8% Municipal 27.5% Regional 48.7% What is the difference between Regional and City services? The City of Vaughan is classified as a two tiered municipality, meaning the City provides local services and the Region provides broader based services to multiple municipalities. The table below are examples of service provided by each. CITY OF VAUGHAN Local Community Planning Waste Collection Subdivision Streets & Maintenance Library Services Fire Services Recreational Services Parks Construction and Maintenance By-law Enforcement Building Inspection YORK REGION Regional Planning & Growth Management Recycling and Solid Waste Disposal Main Arterial Roadways & Maintenance Transit Police Services EMS Public Health Social Housing Social Assistance Licensing 3

How are my municipal tax dollars spent? The City provides the community with 100s of services provided by over 35 departments. The table below are brief summaries illustrating the allocation of a 2012 city tax dollar and examples of your community tax dollars at work. CITY EXPENDITURES BY SERVICE Fire and Rescue Services $0.24 Public Works & Road Services $0.22 Recreation $0.09 Vaughan Public Libraries $0.09 Library Services $0.08 Infrastructure $0.08 Waste Management $0.06 Corporate Administration $0.05 Buildings and Facilities $0.05 Development $0.04 Total $1.00 It should be noted, the illustrated services and infrastructure were provided in 2012 to the average home at a cost of approximately $1200, which is less than many other household expenses (e.g. insurance, natural gas, etc.). HERE ARE SOME EXAMPLES OF YOUR TAX DOLLARS AT WORK Engineering/Public Works - 2,095 Lane Kms of Roads - 1,060 Kms of Sidewalks - 150 Bridges - 24,385 Streetlights - 72 Traffic Signals - 3 Public Works Yards Fire & Rescue Services - 10 Fire Stations - 13 Fire Enginges/Aerials - 12 Fire Tankers/Rescues/etc. Library Services - 7 Libraries & Resources Libraries - 547,570 Library Collection (Items) - 12 Fire Tankers/Rescues/etc. Parks & Recreation - 10 Community Centres - 4 Fitness Centres - 1 Theatre - 1,098 Hectares of Parkland - 19 Km of Trails - 216 Parks - 153 Playgrounds - 128 Tennis Courts - 86 Ball Diamonds (Multi Type) - 84 Basketball/Playcourts - 61 Bocce Courts - 19 Water Play Facilities - 10 Indoor Pool Tanks - 8 Indoor Skating Rinks/Arenas - 148 Outdoor Soccer Fields - 4 Skateboard Parks 4

What are the City s funding sources? Although increasing taxes is always considered a last resort, legislative restraints often force municipalities to default to this revenue source to fund ongoing budgetary pressures, which are conveyed through property tax rate increases. Over 65 percent of the City s budget is funded through property taxes. The following chart provides a good illustration of the City s revenue sources. Funding Sources Reserves 8% Other 9% User Fees 16% Taxation 67% The remaining 35 percent of the City s revenues consist of user fees, reserve transfers and other revenues primarily investment income and fines/penalties. Although these revenue streams are vital to providing services, they are very limited in nature and frequently restricted by legislative requirements and market conditions. Of interest is 90 percent of the City s user fees/charges are related to five sources: Building Standards, Recreation, Licensing, Enforcement Services and Planning fees. The City is continually looking for alternative revenue sources in order to reduce the burden on taxpayers. However, generating increased revenue from these sources is very challenging. 5

How do the City s taxes compare to other GTA municipalities? As can be seen in the following graph, Vaughan households paid $9.34 in property tax for each $1,000 of assessment in 2012. This includes City, Regional and Education amounts and is among the lowest of all GTA municipalities. For the average home in Vaughan assessed at $485,122 this equates to $4,531 in property taxes. Comparison of Taxes in the GTA Municipal Regional School $18.0 $16.0 Tax per $1,000 of Assessment $14.0 $12.0 $10.0 $8.0 $4.0 $2.0 $0 Oshawa Ajax Pickering Whitby Brampton Newmarket Aurora King Stoufville Caledon Mississauga Oakville Burlington Vaughan Richmond Hill Markham Milton Why are City pressures higher than Consumer Price Index? A common measure used to assess the budget and any associated increase is the Consumer Price Index (CPI), but it is important to understand what is typically not included in an inflation index. Inflation rates try to capture price increases; however they do not incorporate other non-price related factors associated with a municipality such as the following: New services or corporate initiatives Infrastructure repair and replacement Additional needs to meet unfunded growth demands Fluctuations in revenues Weighting of expense types and associated increases 6

These items are in addition to an inflation rate such as the CPI. For example, CPI may predict the price increases facing homes but not cost increases due to new family members, remodelling or unexpected home repairs. In addition, the Consumer Price Index is intended to illustrate price increases experienced by the typical Canadian household. It includes retail items such as food, clothing, entertainment and other household purchases. Municipalities are service providers and, unlike an average Canadian household, municipal expenses are very labour, material and contract intensive. There are other indexes available, which are specific and better suited to gauge the price increases associated with municipal spending components. Therefore, there is not a strong relationship between CPI and municipal budget increases. As a result, budget increases will differ from CPI. Listed below are just a few of the many 2012 growth additions to the City: Inflation & Cost of Living Adjustment Growth Pressures Master Plan Objectives Resident Expectations Strategic Initiatives Balanced Budget Legislation Requirements e.g. Accessibility Maintain Service Levels Limited Revenue Sources Infrastructure Replacement Capital Funding Sources Capital projects are funded from the following five main sources: Development/Special Area Charges Reserves: This funding source is based on legislation which imposes charges on new development in the City to pay for growth related net capital costs of servicing new development. The intent of the legislation is to maintain existing capital service levels and fund hard service growth requirements. Development charge reserve collections are dependent on the economy and therefore future capital plans may require adjustments and could be different from the initial development charge document forecast. Reserves: This funding source is derived from dedicated operating budget contributions or allocations of accumulated net revenue for a particular purpose. The City has 7 established a number of reserves to help manage municipal finances and protect

against the potential need to reduce service levels or raise taxes due to temporary shortfalls or unexpected expenditure increases. These reserves are broken into the following categories: Sustainability Reserves - to protect against risk Infrastructure Reserves - to renew the City s assets Corporate Reserves to fund future operational expenses Reserve uses and funding contributions are defined by individual policies and by-laws. Grants and Other Financing: This source of funding is provided by Federal/Provincial/Regional levels, specific contributions and bequests. Typically these funding sources have very prescribed requirements and criteria. Debenture Financing: Debenture Funding is primarily utilized for the City s road and bridge replacement program. Budgets are based on the Pavement & Bridge Management Program Study. Capital from Taxation: Projects identified from taxation funding are primarily the 10% co-funding requirement for growth related soft services ( community centres, parks, etc) as required under legislation and capital projects without a dedicated source of financing, such new initiatives etc. Based on 2012 Capital Budget Development & Special Area Charges 36% Taxation 17% Debenture Financing 17% Grants & Other Financing 17% Reserves & Funds 13% 8

How is new infrastructure funded and why is infrastructure replacement such a large issue? The City of Vaughan continues to grow at an unparalleled pace, adding new facilities, fleet, parks, transportation networks, etc. on an annual basis. Initially these items are primarily funded by the development industry. However, infrastructure renewal and associated costs become the responsibility of the City at a later point. As Vaughan ages, infrastructure renewal spending will accumulate at a pace similar to when they were constructed. The City has over a billion dollars in infrastructure which will require eventual replacement. The primary funding source to support infrastructure renewal is taxation. Without additional investment, there is a risk that Vaughan s infrastructure network will deteriorate, potentially compromising community health, safety, service levels, and quality of life. This is not a unique situation to Vaughan and is a factor that virtually all municipalities are faced with across Ontario. What is the City doing to ensure financial sustainability? As the City moves forward, financial sustainability must continue as one of Vaughan s key priorities. Over the next decade, the City of Vaughan is expected to undergo a tremendous transformation fueled by sustained high growth rates, provincially driven intensification, increasing legislative requirements, mounting infrastructure renewal costs and a number of vision based master plans reflecting important community needs. The City is prepared for this transition and in addition to having prudent policies and a healthy financial position compared to other municipalities; the City continues to demonstrate financial leadership through the following actions: The City s strategic plan Vaughan Vision Strategic planning and financial planning are integrated through a Corporate Planning Process, which identifies preferred strategic initiatives Departments prepare multi-year business plans Budgets are develop over a 4 year horizon The City has developed a longer term Financial Master Plan What are the City s key priorities? On April 17, 2012, Council reviewed the priority themes and initiatives and validated the direction set in 2011 as a number of priority strategic initiatives were not fully implemented and it was important to maintain a focus before adding new priority initiatives to the list. The priority themes and initiatives for this year s budget process are: Develop a plan to build a dynamic Vaughan Metropolitan Centre (VMC) Develop and implement a corporate-wide asset management system Further evolve performance indicators Undertake a program review Additional operational/business reviews 9

What is the Hospital Capital Levy? The City has taken steps to bring a much needed hospital and other health care resources to Vaughan. The Government of Ontario requires local communities to support the development of a hospital through a local financial contribution. It should be noted the financial support and plan for the Vaughan Hospital was approved on June 15, 2009 and subsequently revised on April 5, 2011 detailing a phased-in levy approach, with increases ending in 2013. The approved 2013 average residential property tax increase associated with the separate Hospital Capital Levy is approximately $11 or 0.91 percent, totalling $60 per year for the average home. This is in addition to the tax rate increase to support the City s operations. 10