In the pages of The Press on January 9, columnist Mario Girard reported the remarks of Dominique Ollivier, president of the executive committee of the City of Montreal, concerning the diversification of the City’s revenues. “We will study all possible avenues: eco-taxation measures, tax on foreign residential real estate investments, tax on billboards, tax on outdoor commercial parking lots, etc. “, she says.
Posted at 9:00 a.m.
What are the administration’s objectives? In the 2022 budget, 63% of revenue comes from property tax, shared between the residential and non-residential sectors (industry, commerce). What part should be attributed to each? What share should property tax represent in the city’s overall revenue? Does the diversification of revenue sources consist solely of new taxes or the pricing of municipal services? What share of new revenues will be allocated to the arrondissements rather than to the central city?
In other words, will it propose to implement fees for the municipal services offered? Would all households receive a tax bill for snow removal, waste collection, water supply and other services?
This text deals only with residential pricing. The industrial and commercial sector brings another tax complexity.
Property tax affects all households, both owners and tenants. The owner of a single-family home receives his account and pays it. The owner of a multiplex passes the bill on to his tenants through their rent. For a six-unit multiplex valued at $535,000, the tax bill is $4,831, or $805 per unit included in the tenants’ rent. The situation is similar for all tenants.
By deducting landlords’ share of property tax through pricing, tenants will see their rent fall in proportion to the reduction in landlord property tax.
Introducing service pricing can be done in various ways. Take the example of a new residential water tax. Before it was abandoned by the Doré administration in 1986, the water tax was $60 per unit. The City may set a uniform rate per dwelling or adjust it according to the size of the dwelling or add a surcharge if there is a swimming pool. Water management remains a responsibility of the central city. The recipes should stay in the chests in the city-center.
The same is not true for snow removal, waste management, recreation and culture services, road maintenance, etc.
In the case of snow removal, the cost calculation per kilometer of roadway can be used (report on borough funding, July 2014). In 2015 (latest figures available), the average cost per kilometer was $35,500 for the entire city, but the budget allocation by borough for snow removal does not correspond to the average cost (Plateau-Mont-Royal receives $66,528 per km, the Southwest, $39,063). There is a systemic inequity in the budget allocation of the boroughs.
The cost of clearing snow from one kilometer of residential streets lined with single-family homes remains the same as that of a street with many multiplexes. If the cost is the same, the rate cannot be the same per residential unit.
Snow removal pricing will have to be modulated. The highest rate will be for a sector of single-family homes and the lowest for housing in a multiplex.
Snow removal is a joint activity between the city-centre and the boroughs. The fee should reflect their respective share of expenses. Can revenue from pricing be higher than the actual costs of the services offered?
The City will have to be more transparent about the real costs of the services offered by both the central city and the boroughs.
Expenses are constantly increasing
The Plante administration does not seem to be doing any better than the previous ones. The City’s overall spending has increased by 18% between 2018 and 2022, or nearly $1 billion more (from $5.4 billion to $6.4 billion). City staff increased from 21,526 to more than 23,006 people/year (+6.8%).
The borough budget corresponds to 16% of the City budget. For the same period, their budget increased by 9%, the personnel in the boroughs only increasing by 5%, going from 6902 to 7284.
Have services to residents improved?
The introduction of municipal service fees for each Montreal household will generate greater interest among residents in municipal politics. They will demand more transparency and more efficiency in the management of finances. Would we see the participation in the elections improve? Municipal democracy would emerge a winner.
* Pierre-Yves Melançon is the author of Municipal politics for all (2009) and And if I were mayor of Montreall (2013).