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Municipal finance

Mississauga goes into debt for first time in three decades Add to ...

If anyone needed tangible proof of Mississauga’s maturation, it came this week with the revelation the municipality will have to borrow $20-million next year. The amount isn’t much, but it is a highly symbolic loan for the suburban metropolis, which hasn’t gone into debt in more than 30 years.

Meanwhile, a presentation from city staff projects that, in order to fund services in the new year, the city’s portion of the property tax bill will have to rise 10.8 per cent. When weighted against taxes levied by the Region of Peel, which provides some of Mississauga’s services, the overall tax hike would be roughly double the 2.5 per cent contemplated by Toronto.

That number is by no means final – staff will submit a report Dec. 12 with a recommended 2012 tax rate – but it is a striking figure in a city that once boasted eight straight years of frozen taxes.

For most of its history, Mississauga used levies paid by developers to fund the construction of roads and utilities. Now, there is little empty land left to build on while the city’s aging infrastructure is due for repair. Added to that are more routine expenses, like rising costs of diesel and electricity.

“It’s a difficult year for all municipalities,” said finance director Patti Elliott-Spencer. “We try to maintain services with keeping taxes reasonable.”

The $20-million is the first tranche of a $446-million loan the city will be taking out over the next eight years. Mississauga was initially set to start borrowing in 2013, but a project to retrofit streetlamps with energy-efficient LED lights prompted staff to move the date forward. Later increments of the loan will help finance, among other things, the construction of a bus rapid transit corridor.

Other 905 municipalities, meanwhile, have much in common with the Mississauga of two decades ago.

“Our pressures are always the result of growth. We’re going to have a billion dollars worth of construction this year,” said Vaughan Councillor Alan Shefman, the city’s budget chair. “We’ve opened kilometres of new roads, we’re adding new services. We’re building, literally, a new fire station every year.”

But the city is taking a different fiscal route than Mississauga did. There is nothing wrong with borrowing small amounts of money to fund specific projects, Mr. Shefman argued. He also said it is “ridiculous” to keep tax increases at zero when the city must cope with inflation. Still, he said he was determined to cut back the 4.6-per-cent increase proposed by staff.

Vaughan is also planning for the day it is in Mississauga’s current situation: starting next year, a percentage of property tax revenues will be set aside to pay for infrastructure upgrades decades down the line.

In Brampton, rapid growth led staff to suggest a rise of 3.9 per cent in city taxes, which would translate into a total of about 2.6 per cent once the regional portion of the bill is factored in.

These budgets are far from finalized. Each one must still be scrutinized by councillors.

Mississauga’s largest residents’ association argues this method itself is flawed. Instead of staff submitting budget requests and having council scramble to pare them back in the final weeks of the process, Miranet says councillors should give directives on the size of any tax increase early in the year so staffers themselves can create a budget that achieves it.

“As it is now, at the end of the process, councillors come in and take a machete to the budget,” said Miranet member Dorothy Tomiuk.

The group is also calling for the city to appoint a councillor as budget chief. While such a position is common elsewhere, Mississauga councillors do not take responsibility for specific policy areas.

“The budget is a year-long process,” Ms. Tomiuk said. “But no one pays attention to it until the last month.”

Editor's note: Mississauga had a property-tax freeze from 1994 to 2002. Incorrect information appeared in a headline on Friday.

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