If you use up all your savings, and take on the maximum debt your income can afford, what happens if you need to repair your roof, or replace your furnace?

For the average tax payer this situation might force them to sell their house.

But what happens when the municipality (King Township) does the same thing? Municipalities also have the ability to take on debt. They do so with debentures, which is basically the same as a loan, and they do it for the purpose of financing large projects like a recreation centre or a large sewer project, or to rebuild a failed road.

In King Township, for roughly every $100,000 the Township spends, our taxes must increase by 1% in order to cover the cost. Thus for every $1,000,000 spent our taxes must go up 10% and so on so forth.

In order to avoid a large tax increase like 10, or 20, or 30%, the municipality can instead choose to take on debt. Thus, instead of your taxes going up 30%, like they almost did in 2007, the municipality instead took out a loan, and raised your taxes by 3.8% – just enough to service the debt of $3,000,000 plus.

But just like you, the municipality can only borrow so much money. So what happens when the municipality reaches or exceeds that limit?

Quite simply, they lose their ability to shield their tax payers from huge tax hikes in the event of large unforeseen expenditures like a road failure, or a bridge collapse.

Unlike you who might have to sell your house in such circumstances, or liquidate your assets in order to pay your debts, the municipality simply raises our taxes. In other words, their guarantor is YOU and ME.

Click to Open the May 12, 2010 Edition of NRU

Thus in a scenario where there is no more credit, such as now, our taxes are always at imminent risk of sky rocketing, and that might mean for some tax payers, having to sell their home in order to pay or avoid a 30% tax increase that could come at any time with out warning.

It almost happened in 2007 – all indications are, it WILL happen in 2011, 2012 or 2013…

“Mortelliti pushed to defer the recommendations of staff report until certain minimum information had been satisfactorily provided. He said he wanted further financial data, combined with a 20-year projection of the tax implications of the concurrent projects that will be required as a result of installing the sewers, as well as the $4.9 million Township portion for the proposed Schomberg Arena Curling Facility, as well as other projects currently on the books, including projections for upgrades to the King City and Nobleton Arenas.” King Sentinel, Sept 23, 2009

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I was never provided with this information, and without it my concern is that the increase in our debt ceiling will still leave us maxed to the limit, or beyond once the Schomberg Arena is opened, and once all the roads have to be rebuilt in Nobleton from the sewer construction. In King City, we ran out of money for top course asphalt works. If not for stimulus money from the feds, our roads would have remained in an uncomplete condition. I think this is what will happen in Nobleton. When you embark on a major project, shouldn’t you do your homework to make sure you can afford it over the long term, to secure the stability and welfare of your family, your home and your business?

Shouldn’t the municipality be required to do the same? Or should the council of your municipality be permitted to gamble with your tax dollars, and the financial viability of your future?

With everything that is happening in the U.S. and abroad, with the state of the European Union, the Euro and the insupportable public debt in Greece, Portugal and other countries, what sort of arrogance is this to think that we are some how immune to the same fate?

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