The revenue from taxation increased by $8.4 million, or 38%, between 2011 and 2020. For comparison the Consumer Price Index (CPI) increased by only 18.3% during this same period. As shown above, the increase in revenue from taxation was fairly linear during these years. This greatly increases the confidence in a linear projection of tax revenue into the future which is shown by the dashed trend lines. This linear projection shows that revenue from taxation has been increasing steadily at an average rate of $914,781.00 per year.

The 2022 tax revenue shown in the approved 2022 budget is $32.5 million. This is shown on the graph above by the yellow star. This represents an increase of slightly over $10.5 million or 47.7% since 2011. It's noteworthy to see that the value for 2022 taxation is nearly right on the trend line which has a projected value in 2022 of $32.2 million. This is an indication of the accuracy of the Trend Line. Therefore we can say with some degree of confidence that if Council continues on the path of increasing taxes at the same rate, the city’s revenue from taxation will reach $37.7 million in the next 6 years. That’s an increase of $15.7 million or71.4% since 2011. Unfortunately, it gets worse. The impacts of high inflation, that we are now facing, will likely drive future tax increases much higher. So, unless the new Council dramatically changes the past approach to the budget process, you can expect an annual tax increase in 2023 that is much greater than the current annual average of $914,781.

Updated Figures

We used the equation y = $914,781x - $1,817,452,994 to project tax revenues. Based on this formula, we predicted that tax revenue for 2022 would be $32,234,188—which is $265,812 less than the amount the city had budgeted. However, the 2022 Audited Financial Statements show the city actually collected $33,095,738 in taxes. That’s $595,738 more than budgeted, and $861,550 more than our prediction.

Using the same formula, we projected 2023 tax revenue to be $33,148,949. The 2023 Audited Statements report actual tax revenue of $33,772,275, which is $623,326 more than our estimate.

What Does This Mean?

Our equation was based on tax data from 2000 to 2011. The fact that actual tax revenues in 2022 and 2023 exceeded our projections suggests that tax revenue is now growing at a significantly faster rate than it did during that earlier period.

Why are Taxes Growing Faster Than Inflation?

If, in 2011, Council had directed that all future tax increases be limited to inflation, then revenue from taxation in 2020 would have been $26,155.388 or $4.3 million less than what actually occurred as shown by the green line on the above graph. When we project this into the future it gets even more dramatic. If inflation were to continue at the same rate and if tax increases were capped at CPI in 2011, then taxes would reach $29,948,668 by 2028. This is actually $2.5 million less than what they are today. Unfortunately we know that future CPI will be much higher than 2%.

The reason why tax increases climb exponentially, is the compounding impact that successive annual increases have on the end result. For example, a hypothetical council imposes a tax increase of 3% to a $10,000,000 budget, in year one, resulting in a new budget of $10,300,000 or an increase of $300,000. If it again imposes a 3% increase in year 2 the new budget would be $10,609,000 or an increase of $309.000. In other words the dollar value of the budget grows a little bit faster every year even if the percentage increase remains the same at 3%. That is because the percentage increase each year is not only applied to the original budget but also to all of the pervious increases of past years. The net result is that even if the percentage increase is small and remains the same each year, the size of the budget grows exponentially resulting in the size of the budget doubling in 24 years.

The rapid growth of taxes over the past ten years has had a devastating impact on all of us - residents and businesses alike. The group that is likely most affected by these property tax increases is, surprisingly, the group that doesn’t actually own property, the renters. Residents that rely on the availability apartments to rent make up a large portion of our population. Generally this group does not have the means to buy a house so they are at the mercy of landlords. You can be sure that those that own apartment buildings pass on 100% of their property tax increases to their tenants if not restricted by rent controls. The impact of high rents is only one of many impacts that chronic annual tax increases have had on Owen Sound residents. I will discuss many of these in a future article.

Ignoring the Problem

In December of that year we watched a budget presentation that was clearly aimed at trying to convince us that Owen Sound was really doing well relative to others, in spite of the data showing us otherwise. We saw BMA tables of Grey/Bruce municipal taxes showing Owen Sound had the highest taxes of all the municipalities in 2022. Yet in all cases, our attention was drawn away from the bad news by ‘BIG Yellow Stars’ highlighting some small positive point, with words like “THIS IS A HUGE IMPROVEMENT”. The message seemed to be that, although things are bad this year, last year they were really-really bad. Did they think that it would somehow be comforting for us to know that things were worse last year? If you hadn’t done any research on this subject you would have come away from that meeting thinking that things really weren’t that bad and that council was doing a great job.

It’s not until the smoke clears and reality sets in, that you realize that we are not, by any stretch of the imagination, doing well when it comes to property taxes compared to other municipalities. We are not only the highest taxed when compared to similar municipalities but we are the highest taxed of all municipalities in Grey and Bruce counties. For example, in spite of the ‘BIG Yellow Stars’, taxes on an Owen Sound detached Bungalow are $4,268. This is $800 higher than our nearest competitor, Kincardine. As well, Owen Sound taxes are a whopping $1,275 above the average of $2,993. That’s the reality that should have been the focus of the presentation, not that we slightly closed the gap with our competitors. Why did staff feel the need to highlight the little kernel of positive news? Was it an attempt to distract us from the magnitude of the bad news relative to other municipalities? Don't forget that High Taxes drive high Rents.

Shutting Down Discussion

The public witnessed a resident’s attempt to highlight the fact that, when compared to similar municipalities, Owen Sound has the highest taxes. In spite of the Procedural Bylaw allowing him five (5) minutes to ask his question, he was quickly shut down at the two (2) minute mark by the Mayor who was visibly disturbed by his assertion. The Mayor responded, in a loud, commanding voice, with all of the authority granted him by his position as Head of Council, saying: “Owen Sound does NOT have the highest taxes” and that the resident’s information was outdated. The Mayor went on to say that there are municipalities in Ontario that have higher "taxes per capita" than Owen Sound. However when we examine this we find that those municipalities are almost all single tier municipalities that provide a much higher level of services than Owen Sound as a lower-tier municipality. Hence, they are not at all comparable municipalities, which was the premise of the resident’s question. Why did the Mayor feel the need to belittle this resident at the podium and in spite of the Procedural Bylaw interrupt him after only two (2) minutes?

Misleading Statements to Hide Reality

At the recent Public Meeting on January 29, 2024 City Treasurer responded to a select number of submitted budget comments with a 35 minute presentation that seemed to build on the past theme that Owen Sound is doing well. This strategy also includes the presentation of factual, yet misleading information, such as highlighting Percentage (%) increases rather than actual dollar ($) increases, when making comparisons. As I’ve mentioned before, a one percent tax increase in Owen Sound is equivalent to a 2.3 percent increase in Georgian Bluffs when it comes to the impact on taxpayers. However if you were to say that Owen Sound’s taxes increased, by only one(1) percent and that Georgian Bluffs taxes increased by 2.3%, people would think that Owen Sound was doing better than Georgian Bluffs. The reality is that when it comes to the impact on taxpayers they are both doing exactly the same in this scenario. Percentage increases can be very misleading to the average resident, so whenever possible comparisons should focus on the relative impact to taxpayers. You can read my full analyses of this latest attempt to obscure and deflect the reality of our situation at www.hightaxes.ca.

The response that I think best highlights this practice is the one given to the question: “Why does the city have 79 staff on the Sunshine List?.” The Treasurer acknowledged that there are indeed 79 employees on the Sunshine List earning more than $100,000. However, then went on to say that we need to remove those employees, in Fire, Police, Library and Water in spite of the fact that all of these employees all receive pay cheques emblazoned with the City of Owen Sound logo and are all paid using funds that the City of Owen Sound collects from residents. In regard to the Library, the city does receive some revenue from the other municipalities, but all employees are Owen Sound employees which is why they appear on Owen Sound’s Sunshine List.

If you read my paper you will see that I didn’t include Protective Services in my comparisons because some have contracted OPP police officers and some have volunteer firefighters. However, this question did not involve making comparisons so it was not appropriate to remove police and fire employees on the Sunshine List. It was a simple question. WHY do we have 79 employees earning over $100,000?, and it was never addressed. Rather there was an attempt to argue that this was not out of the norm for municipalities. Yet, it is. No matter how you do the comparison with similar municipalities, it is not normal for a municipality of the size of Owen Sound to have 79 employees on the Sunshine List.

Why Ignore Research Based on Audited Financial Statements

I don’t have the real answers to the above questions. You will have to get those from the Mayor and council. However what I do know is that a better approach, in regard to my paper, would have been, after first acknowledging you received my paper, to invite me to sit down with them to discuss my findings, or to invite me to present my paper at an open council meeting with the objective of opening discussions with the community and providing the public with the opportunity to discuss the facts and brainstorm solutions.

In regard to the Mayor’s response to the question on high taxes on 18 Dec, a better response would have been to acknowledge that the resident was correct and that taxes are high when compared to others and not attempt to deflect the question. Perhaps then he could have committed to opening meaningful discussions on the budget in an environment that was more conducive to public interaction such as the one outlined by Anne Finlay-Steward in a recent post referring to the open public budget meetings we used to have.

“The Owen Sound public budget process started with an afternoon and evening at the Bayshore, with every City department head at tables around the room to give citizens information about their department and answer questions.”    Anne Finlay-Steward, Hubbub FB Group.

With respect to the budget presentations it would have better received had there been a clear statement on the reality we are facing today as a result of past spending habits. The presentation should not have focused on the relatively insignificant progress that the budget was making. This had all of the earmarks of a marketing tactic that reminded me of a car salesman shining the wheels on a clunker to distract from the fact that it didn’t run. Instead the public meeting should have started with an admission that things are not good but that Council is tackling the problem head-on with this budget and were open to listening to suggestions from the public on how we could do better. Such an honest approach would have gone a long way to gaining public trust. Instead the public is left with the impression that Council has yet to accept that Owen Sound has been in a downhill slide for many years. Until the reality of our situation is accepted by Council, Owen Sound is not in a position to take the first step in the recovery process.

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