Drilling Down: Analysing Municipal Tax Rates

Jeff Green | Mar 08, 2023

Frontenac County increased taxes by almost 9% this year, the largest increase in memory. And, as we reported last month, members of Frontenac County Council said there was little they could do to lower that increase, after they received the draft budget from county staff . The Frontenac County budget is made up mostly of fixed costs, since the major services that the county delivers are ambulance, long term care, planning and IT services. The cost of delivering those services comes down to the cost of labour, and other fixed costs such as fuel and supplies.

The high increase came directly from the high inflation that has been a global reality this year.

As to the impact of the Frontenac County budget on tax payers, all Frontenac County residents pay the same rate. This year that will be about $208 for every $100,000 that each individual property is assessed at. Another $153 per $100,000 is charged by the provincial government for education taxes.

While all Frontenac County residents will pay about $363 (per $100,000 in assessment) for the first two components of their tax bill, the last, and largest, part of the bill varies widely from township to township.

And now that the three Frontenac townships, that we cover at the Frontenac News, have all completed their budget debates, we know those numbers as well. South Frontenac set its levy to ratepayers for township services at 2.1% more than last year, Central Frontenac at 2.9% more, and while North Frontenac has not formally approved their budget, they met last Friday and have settled in at a budget increase of about 3.75%.

These increases are comparable, and all came about through cost cutting, in order to offset the impact of inflation on operating costs, and by making at least some use of reserve funds, to cushion the blow on ratepayers.

Assessment growth, due to new construction, blunts the impact of the increases by about 1% for most property owners in Frontenac County, whose property valuation is the same for the 2023 tax year as it was in 2022

As we noted earlier this year, the variation in taxation between the three townships is quite large, and the gap will increase a little more this year.

South Frontenac's local tax rate in 2022 was $613 per $100,000 in assessment, and that rate is set to rise to about $617.

Central Frontenac's local tax rate in 2022 was $964 per $100,000 in assessment, and that rate is set to rise to about $979.

North Frontenac's tax rate in 2022 was $700 per $100,000 in assessment, and while the 2023 is not set yet, it will likely increase by between $15 and $20 in 2023.

This all means that the total tax rate in South Frontenac, including township, county and education taxes, is about $821 in 2023, the Central Frontenac rate is about $1172, and the North Frontenac rate will be somewhere around $925.

The 'x' factor for each property owner is the valuation of their property. Since the rates are based on a $100,000 in value, the owner of a property valued at $250,000 in South Frontenac will pay 2.5 x $821 = $2053.50 in 2023.

The owner of a property valued at $175,000 in Central Frontenac will pay 1.75 x $1172 = $2051 in 2023. The owner of a property in North Frontenac that is valued at $200,000 will pay 2 x $925=$1850

While tax increases are never popular, the sticker shock, when tax bills come out, will not be the same as what we all have been facing when looking at the price of lettuce and celery in the grocery store, in recent months. However, while we can buy cheaper vegetables or wait for the price to decrease, there is no avoiding municipal taxes.

Two added notes about municipal budgets

Readers of the paper may notice that our reporting of budget increases is not always the same as the municipal reporting.

That is because our reports are based on the difference between the levy to ratepayers from one year to the next.

We do this because, in our view, municipal budgeting is about the amount of taxpayers money that townships require in order to deliver services.

Some townships report on their numbers as we do, but others look at the impact of their tax rate on the average property, or account for growth, in the numbers they report.

While these are all legitimate ways of looking at budget impacts on ratepayers, it makes it hard to compare budgets in different townships, even those in the same county. 

The second note about municipal budgets in Ontario is that we are still living under a system that was brought in place 25 years ago by the Mike Harris government. This system transferred costs from provincial taxation to municipal taxation in a very overt way.

For example, The Frontenac County levy we pay every year, includes major costs that were used to be fully funded through provincial taxes, including the cost of Fairmount Home and Frontenac Paramedic Services. Now, the province pays about half of those costs, at best, and the rest ends up on our municipal tax roll.

And the burden of paying for upkeep on Roads 38 and 506/509, which have a profound impact on all of our local township budgets, would not be there if those roads had not been downloaded from provincial to municipal jurisdiction 25 years ago.

The difference is particularly relevant in smaller municipalities and is responsible for many of the problems faced by local councils.

Central Frontenac ratepayers, for example, have been paying extra municipal tax, every year, for the rebuild of Road 38 that took place in 2006, even though part of the cost of that rebuild was covered by a provincial grant.

The council of the day had no choice but to spread that cost over decades because it cost more to do the road, than they collected in taxes each year to cover all the other costs of running the municipality.

And while it was a Conservative government that brought this system in, the Liberal government that followed, and remained in power for 13 years, did not upload those costs. 

They did moderate the impact on smaller, rural municipalities by creating a grant program that favours low population municipalities, but they kept the downloads in place, and we are still paying higher municipal taxes so that provincial governments can charge less in income tax.

Income tax fluctuates each year based on how much money we earn, and has a rate that increases incrementally as income rises. It is a ‘progressive’ tax.

Municipal taxes are based on property values, and they do not go down when the property owner loses their job or becomes ill. There is no relief for municipal ratepayers as their circumstances change. That makes them a static or ‘regressive’ tax.