contents courtesy of Rob Fitzgerald, Norm Stickelmann & Ted Enemark
Consumption by Class
Consumption by Class (CbC) is the financial methodology used for allocating budgeted property tax dollars among the nine (9) provincially designated classes – based on net consumption of services by each class.
CbC is the centerpiece of the ‘Municipal Sustainability Model’ (Fitzgerald, Stickelmann, Laurie & Sullivan) which calculates the price of availability and likely need for services by each class of property, rather than actual consumption or use by individual property owner/occupiers. Contrary to the current municipal practice of budget allocation by class, typically based on the political perception of taxes warranted, (PbC), CbC allows a city to identify and then maintain the optimal balance between the net amount of services consumed by each class and the property taxes paid by that class, even as the structure and economic characteristics of the city have changed or evolved over time. CbC brings an understanding of the performance metrics and measures for all stakeholders, namely the mayor and council, the city administration, residents and the business community, as currently there is no known definition or practice of an analytically based allocation methodology for fair and reasonable property tax distribution.
Issues Faced by Municipal Stakeholders
1. The current Municipal Governance Model limits Federal/Provincial confidence in addressing perceived ‘fiscal imbalance’ and deters predictable investments in municipal infrastructure.
2. Municipalities have no natural mechanism for organizational renewal other than the three (3) year election cycle.
3. In the absence of a performance based Municipal Sustainability Model, city politicians have limited means of determining ‘fair and equitable/reasonable’ taxation levels.
4. Taxpayers are frustrated with ‘short term’ ideology trumping ‘long-term’ economic realities. A three (3) year election cycle runs counter to a 50-100 year municipal infrastructure investment horizon.
5. There is an absence of ’taxpayer-funded’ disclosure minimums for continuous monitoring and transparency; there are few meaningful annual ‘tax-spender’ standards of disclosure.
6. Strategic budgetary policies are the result of a municipal planning process that does not incorporate economic analysis. Failure to employ ‘Tax Topography’ analysis is resulting in unaccounted financial losses from new development at the expense of existing and future tax payers.
7. Municipalities do not define the ‘maximum sustainable build-out growth envelope’. There is no definition of upper limit benchmarks or the ‘carrying capacity’ of a municipality.
8. Increases in municipal budgets are continually in excess of taxpayer cost of living increases.