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"The State is Concentric, but the Individual is Eccentric", James Joyce

King Council Digging Us All Deeper into Debt

Posted by Cleve Mortelliti On May - 12 - 2010

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

Click to Enlarge

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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4 Responses

  1. Andrea Loeppky Says:

    Cleve, I would like to see you add a bit on the financial history of the Township. Specifically, could you present the financial position when Mayor Black first took office, my understanding is that the Township had zero debt at that time a debt over time graph would be an easy way to present this point.

    Posted on May 15th, 2010 at 5:11 pm

  2. Steve Says:

    I agree, would be useful to see the bigger picture over time. Also, what in the world is happening with King Rd – will they be fixing it soon??

    Posted on July 12th, 2010 at 11:07 am

  3. Cleve Mortelliti Says:

    Hi Steve,

    Yes, not only useful but imperative. How can anyone be expected to make responsible decisions without a full understanding of the consequences? Pretty basic isn’t it…

    I will get back to you via email with your request re: King Road. You’re not the first to ask this. The houses of the nearby residents shake every time a truck drives over those bumps. I hope its this summer but I know that the Region is bringing the new watermain along King Rd from the new Dufferin Street water tower to connect to the existing Fisher Street tower. I suspect they would not want to place a new surface until that work is complete. (But then, that would make sense wouldn’t it…;) Stay tuned, and thanks for the comment.

    Posted on July 12th, 2010 at 11:35 am

  4. George Graham Says:

    Yes, I completely agree. People want low taxes and still want the township to spend money on everything like the goverment is a big pot of money. Council needs to JUST SAY NO!!

    Posted on February 7th, 2012 at 10:01 pm

Recent Comments

My name is Cleve Mortelliti and I am the Councillor for Ward 1 in the Township of King, Ontario – Canada. I love this Township. King City has been my home since 1972. From 2004 to 2006 I had the privilege to work as an Engineering Administrator for the Township of King. But my overriding desire to make a real difference and to have a more positive, impactful influence on the shape and form of the development wave that is coming to King, led me to leave my employment with the Township and declare my candidacy for Councillor of Ward 1 (King City, Snowball, Kettleby). At approximately 10:00pm on November 13th, 2006 I was truly thrilled to learn that the residents and ratepayers of Ward 1 had bestowed their trust in me to serve as their councillor for the next 4 years . In the successive 2010, and 2014 elections I was re-elected by acclamation. It remains my honour and privilege to serve King.

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