Root causes of tax rate differences in Frontenac County

Jeff Green | Nov 11, 2020

The Frontenac News ran an editorial two weeks ago (Vol. 20, edition 41, October 29) about a consultant’s report on how to improve the delivery of services from a cost and efficiency point of view in Frontenac County.

The option of full integration of service delivery, municipal amalgamation, was not an option that was considered by the consultants because they were not asked to look at it.

Instead, they were asked to determine ten service areas that could be improved.

In the editorial, I wrote that this was a missed opportunity, that the way Frontenac County was set up in 1998 seems to have been flawed and should be reconsidered.

This is an option that politicians in Frontenac County may, but likely will not, look at as they consider this report.

The editorial made a few points that should be clarified.

One of them was about tax rate discrepancies. The rate in South Frontenac is 11% lower than the rate in North Frontenac and 58% lower than the rate in Central Frontenac. This does not mean that South Frontenac is more efficiently run than Central Frontenac. It only means that Central Frontenac residents pay more for those services relative to the value of their individual properties.

Property values play a big role. It costs the same to provide services to a four-person home valued at $150,000 as it does to provide services to a 4-person home valued at $600,000, but the owner of the $600,000 home will pay four times as much in taxes. And if that $600,000 home is a summer cottage, it may generate less cost for the local township than a $150,000 home that is occupied all the time.

Economies of scale matter as well. Roads that have one house per kilometre and roads that have ten houses per kilometre get the same amount of snow each year and that snow costs the same amount of money to remove.

If we compare South, Central and North Frontenac in terms of households, the differences become clear.

Using 2016 figures, the latest census, there were 10,000 homes in South Frontenac, and just under 30% of them were seasonal dwellings. There were 3760 homes in Central Frontenac, and 1810 of them, 48%, were seasonal. There were 3060 homes in North Frontenac, and 2335 of them, 71%, were seasonal.

What these numbers point to is a goldilocks effect, in reverse, for Central Frontenac as compared to its neighbours.

With three times as many homes, many of them concentrated in its southern rim, South Frontenac benefits from economies of scale and population density, as compared to its northern neighbours, when it comes to generating revenue from its residents. There are simply more taxpayers to cover the costs.

With 70% of its homes being seasonal dwellings, North Frontenac is in a better position than Central Frontenac because it generates revenue from the majority (the seasonal residents), while most of the need for service comes from the minority (year round residents).

Central Frontenac faces a structural disadvantage compared to its neighbours, resulting in higher taxes. It does not have the economy of scale that South Frontenac has, and it does not have the very high proportion of seasonal residents that North Frontenac has.

The point behind proposing that amalgamation be considered is that if all three municipalities were together, the entire mix might work better, in terms of efficiency and costs, for the whole county and would make a level playing field, in terms of cost for homeowners, throughout.

Central Frontenac residents would see immediate tax decreases and North and South Frontenac might see increases at first, but they would likely lessen over time.

One other aspect of Frontenac County that does not make a lot of sense, at least on the surface, is the fact that Frontenac County ratepayers pay the City of Kingston to deliver social services, and City of Kingston ratepayers pay Frontenac County for paramedic services and the Fairmount Home, which is a Kingston based long term care facility. If these were reversed, each municipality would have that much more control over their own spending, and a major irritant between the City of Kingston and Frontenac County would be gone.

One of the perceived drawbacks of municipal amalgamation is loss of identity. But in the case of Frontenac County, people tend to identify with their own community and not their municipality.

Ask someone where they live, and they will refer to the nearest village. People identify with Parham, Plevna, Cloyne, or Battersea, not with South or North Frontenac.

The communities that make up Frontenac County have much stronger identities than any of the municipalities and that can be a strength, not a weakness.

If we were all subject to the same costs and the same service levels, we might all be better off.

A time of unprecedented growth, in terms of construction and the resale market, is the best time to consider our shared future.