Winnipeg Shows the Way
by John Sewell, MuniMall Guest Columnist

It is often difficult to determine what the next step in a program of change and reform. Sometimes it seems the way forward is blocked. But then, somebody steps forward with an idea and the next step suddenly feels inevitable.

This is the case with Winnipeg's extraordinary foray into creating new and improved revenue sources. This initiative provides direction for other local governments in Canada sharing the same concerns.

Mayor Glenn Murray refers to the proposals as a 'New Deal', and it's new in a number of ways. First, it proposes that revenue sources should be aware of and sensitive to outcomes. Then, it suggests that activities one wants to discourage be taxed so individuals know there are costs involved in consuming some particular service.

These approaches are far different from the way Canada municipalities have traditionally raised their revenues from the property tax system. Assessments according to property value are at the root of the property tax system, which means that sprawling low-valued homes pay less taxes than compact homes -- thus encouraging sprawl -- and property renovation is discouraged by attracting a higher assessment and thus higher taxes. These problems have been evident to many, and much ink has been spilled by attempts to reform the property tax system, without success.

The New Deal rethinks property taxes. It starts by reducing them by half (making up lost revenue from other sources), then shifts more of the assessment burden from the structure onto the land by such things as relating the levy to the width of the property. This tax policy would penalize large low density properties and instead encourage compact urban form, and that would reduce the need for new infrastructure in coming decades.

Business property tax would be replaced with a share of sales tax so that the tax payable by a company would be more directly related to the health of the business rather than to the value of the property it occupies.

Lost revenue would be made up from select user fees. Water and sewage fees would be increased so that higher users would pay more, and a similar strategy would be used for garbage. Traffic and building code enforcement fines would be increased to cover all of the costs of enforcement and perhaps create a positive revenue stream.

The New Deal also proposes new sources of revenue from a levy on hotel rooms, a fee on telephones to fund 911, a liquor tax and the city's own sales tax.

Help is also requested from senior governments in a share of the gas tax from the federal government (as promised by Paul Martin) and also the possibility of the city itself levying an extra fuel tax. These moves would support public transit, both by raising revenue that could be devoted to transit, and by making private automobile use more expensive and less attractive. The New Deal suggests further that the province could share some of its sales tax and income tax revenue with the city.

Preliminary analysis of the New Deal suggests that property taxes can be reduced 50%, transit fares can be cut in half, and recreation fees would be held at the current rates, while extra revenue to the city would be about $120 million a year - enough to address the city's substantial infrastructure needs.

The key to the New Deal is sensitive tinkering with a number of different revenue sources to get the balance of encouragement/discouragement right for the city. It's clearly an approach that other cities can borrow or steal.

Also of interest is the way the New Deal is presented. There is no formal paper presented on the City of Winnipeg's website, but rather a number of different press releases and Question and Answer documents. It is put forward as a work in progress, something for discussion, not a fait accomplis. Town hall meetings have been arranged for further discussion of the proposals and Mayor Murray has already had a session or two of direct interaction with Winnipeg residents on the internet, using a question and answer format.

For further information, go to http://www.winnipeg.ca and click on 'New Deal' buttons in the upper right hand corner of the site.

The New Deal has a fresh ring to it, one that feels like it is trying to put forward a progressive set of ideas to deal with city finances. Not one Big Bold Idea, but a set of workable strategies that just might get Winnipeg to where it wants to be.

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