Report to: General Committee Report Date: September 7, 2010
SUBJECT: Provincial Offences Act Courts – Amended Agreement
PREPARED BY: Paul Wealleans, Director Revenues
Ext 4734
RECOMMENDATIONS:
THAT the report “Provincial Offences Act Courts – Amended Agreement” be received;
AND THAT the Mayor and Clerk be authorized to execute an amended “York Region Courts Inter-municipal Agreement” in a form and content satisfactory to the Chief Administrative Officer;
AND THAT staff be authorized and directed to do all things necessary to give effect to this resolution.
PURPOSE:
The purpose of this report is to obtain the
approval of Council to execute an amended “York Region Courts Inter-municipal
Agreement” between the Region of York and the nine area municipalities in York
Region. The agreement addresses the revenue and cost sharing arrangement for
court services in York Region between the Region and the nine municipalities.
BACKGROUND:
At its meeting of December 1, 2009 Council adopted a report entitled “Provincial Offences Act Courts Amended Inter-municipal Agreement”. The report provided the preferred approach to a funding distribution for courts and also directed that a new York Region Inter-municipal Agreement be developed and executed which will achieve a more accountable and sustainable governance model.
Staff’s report referenced the meeting of York Regional Council on November 19, 2009, where it adopted the following:
It is recommended that:
1.
Subject to receiving the concurrence of all local
municipal Councils, Regional Council authorize the Chair and Clerk to execute a
new “
2.
Upon the execution of the new Intermunicipal Agreement,
funding distributed to the local municipalities be increased from $2.9M to
$4.3M in 2010 conditionally upon:
a)
The Region retaining all revenues except those
specifically resulting from local municipal prosecutions, and
b)
The increased amount ($4.3M) being transferred from the
Regional to local portion of the property tax bill starting in 2011.
3.
Regional staff prepare and implement a communication
plan outlining the property tax implications for 2011 in consultation with all
of the local municipalities.
Options/
discussion:
Following the actions of Regional Council and the nine area municipalities in 2009, York Region staff have prepared a new “York Region Courts Inter-municipal Agreement” to be executed by the Region and the nine municipalities. The agreement addresses the revenue sharing arrangement for court services in York Region between the Region and the nine municipalities. A copy of the draft agreement is attached as Appendix A.
Eliminating
revenue distribution to the local municipalities
The Report recommends that the distribution of revenue to local municipalities cease in 2011 save and except with respect to Building Code, Fire Code and municipal by-law fines which would continue to accrue to the Town. This would have the effect of reducing local municipal revenues by approximately $4.3M, and increasing the Region of York’s net revenues by the same amount ($4.3M). Markham’s share of this decrease in revenues is $816,000. The reduction of revenues at the local municipal level will require an increase in the tax rate to generate replacement revenues, whereas in the Region’s case, the tax rate will be reduced, as the Region will be retaining an additional $4.3M in revenues. In principal, this methodology, known as exchanging tax room between the two municipal levels, has no affect on the taxpayer, as the associated tax rate increase at the local municipal level is offset by the same tax rate decrease at the Region’s level.
Upon execution of the agreement, the Region proposes to distribute revenues to the local municipalities in 2010 at an increased level (increased from $2.9M in 2009 to $4.3M in 2010). Markham’s share of the increase is $385,000 bringing the total in 2010 for Markham to $1,201,000. Starting in 2011, the revenue distribution to the local municipalities will cease, except for the Building Code, Fire Code and municipal by-law fines (as noted above).
Explanation of Tax Room Methodology
As discussed above, a “tax room” methodology would require the Town to increase our tax rate in 2011 to compensate for the lost revenue, and the Region would decrease their tax rate to reflect the increased revenue. In effect the Region gains “tax room”, while the Town of Markham (and the 9 lower tier municipalities in York Region) lose “tax room”. For Markham, the lost revenue in 2011 is $816,000.
The following is a simple illustration of the proposed “tax room” methodology, based on 2010 tax rates, and assuming that both the Town and the Region approve zero percent tax increase for 2011:
|
Example
Illustration of Tax Room |
|||||
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|
|
|
|
|
|
|
Assessed Value |
$440,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Tax
Rate |
Tax Paid |
2011 Tax
Rate |
Tax Paid |
Increase
(Decrease) |
|
|
|
|
|
|
|
|
Town of |
0.245313% |
$1,079.39 |
0.247178% |
$1,087.58 |
$8.21 |
|
|
|
|
|
|
|
|
Region of |
0.477021% |
$2,098.89 |
0.498025% |
$2,090.68 |
-$8.21 |
|
|
|
|
|
|
|
|
Total |
0.722334% |
$3,178.27 |
0.757021% |
$3,178.27 |
$0.00 |
A key recommendation in the Region’s report is that Regional staff were directed to implement a communications plan to clearly outline the tax implications for 2011 and the impact on the nine municipalities resulting from this agreement.
The communication of this methodology to the public will be challenging. The “Tax Room” methodology, as discussed, will require the Town and Region to restate the prior year tax rate to be comparable.
For example, using 2010 and 2011 years as an example, when the Town’s 2011 tax rate is published with the message that the tax rate increase in 2010 was zero, the communication to the public would state that the Town’s 2010 tax rate of 0.245313% is restated to 0.247178%.
FINANCIAL CONSIDERATIONS AND TEMPLATE:
In 2010, the Region of York will increase court revenues to the local municipalities from $2.9 million to $4.3 million bringing Markham’s total for 2010 to $1,201,000 but beginning in 2011 the nine municipalities will receive no court revenue except for the Building Code, Fire Code and municipal by-law fines.
In 2011, Markham will see a decline of $816,000 in revenue and the Region will gain $816,000 that otherwise was Markham’s.
The tax rates of all municipalities and the Region will be re-stated for 2011 calculations to reflect this. While Markham’s rate will be re-stated higher, the Region’s rate will be re-stated lower in an equal offset. The impact to the taxpayer will be zero.
HUMAN RESOURCES CONSIDERATIONS:
Not
applicable
ALIGNMENT WITH STRATEGIC PRIORITIES:
Not
applicable
BUSINESS UNITS CONSULTED AND AFFECTED:
Legal Services Department
Clerks Department
RECOMMENDED BY:
___________________________ ____________________________
Joel Lustig John Livey
Treasurer Chief Administrative Officer
ATTACHMENTS:
Appendix A: York Region Courts Intermunicipal Agreement
Q:\Finance\SHARED\2010 General Committee Finance\1026 POA Courts - Amended
Agreement.docx