1. This thread may not be popular. But I'm hoping it explains one of things that annoys property taxpayers: why do my property taxes go up each year.
2. Property tax is a levy. Basically all the costs of city services are added up and then the total needed is shared across all the properties in the city according to value. So your taxes are your share of the total costs of services.
3. Property Tax revenues don't rise with inflation (ie. Property values). Hence if there's any year over year cost increases, they must be covered by a slightly higher tax rate (levy) for the same level of service.
4. Ah, you say, what about growth? New buildings, subdivisions? Yes, this adds revenue, but also costs. Roads to plough, parks to maintain, lights, pipes, etc. Residential growth is rarely revenue neutral.
5. Most municipalities are able to hold year over year cost increases to about 1 - 3% in the current climate. Collective increases and contract cost increases are typically biggest drivers. Unusual impacts such as costs to meet new legislation etc. can add to that.
6. Historically municipalities have also kept taxes down by underinvesting in state of good repair for infrastucture. This is like owning a house and never fixing the roof, or the windows, or replacing the furnace.
7. This is changing. Muni's are now taking better care of our assets. To pay for that Infrastructure levies are now common in many Ontario cities as a component of the annual tax increase. But that takes a 1-3% increase and makes it more.
8. Sr. Levels of government have recognized this problem and responded with infrastructure programs and gas tax transfers. Good policy b/c it also helps Canada be more competitive economically & creates jobs. But there's still a big gap.
9. So cities continue to face a Faustian choice: raise taxes, issue debt, or don't fix the roof...and hope it doesn't leak. For most the responsible choice is to push as hard as possible to keep cost increases low, and try to spend a little more each year on infrastructure.
10. In a low interest rate environment many choose debt. Not a sustainable choice though. Which is why most cities ask their residents for a 2-4% tax increase each year.
