Philosophy Hammer
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Non Tax Revenue
The City can keep taxes low and improve services
By: James Jeff McLaren
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Opinion Piece on Non-tax Revenue: There is a third option besides cutting taxes or cutting services: increasing non-tax revenue.

Finding new and innovative non-tax revenue sources is one strategy the City of Kingston can employ to balance our budget while limiting future tax increases and without cutting any services.

This is important because city council has just set a tax increase lower than what staff recommended. In order to maintain existing services, roughly $3 million will need to be found in operational efficiencies. If these efficiencies cannot be found then conventional wisdom would suggest that we will have to revisit the tax question or cut services.

Traditional thinking often seeks to balance budgets with some combination of service cuts and/or tax increases. However, there is a powerful third strategy that I believe must be given its due attention if we are to build a thriving and livable city: We must find new non-tax revenue sources by expanding our existing services and expertise along paths of profitable opportunities. In this way we are no longer stuck in the politically false either/or choice of either cutting service or raising taxes. Now that council has passed a budget with a tax rate increase of 2.5% (1.2% less than staff was asking), it has become critical to find new non-tax revenue to fill the gap between the funding we need to maintain services and the taxes we collect. This gap can be filled if we can improve and expand core services where opportunities exist to make money.

This strategy ought to be a politically unifying principle. Many councilors heard during the election that tax increases must be kept low; many councilors heard that infrastructure and services need to be improved. Which side is going to win? I believe both sides can win; I believe council can serve all our constituents wishes by thinking outside the either ‘tax cuts’ or ‘service cuts’ choice. We ought to consider the business case for new ways to provide profitable services to third party institutions.

If the City of Kingston, because of some competitive advantage, can provide a particular new or expanded service profitably to a willing third party then we, as a community, benefit though expanded services paid by the third party. This is non-tax revenue.

The City of Kingston has several competitive advantages that I believe we could develop better in order to increase non-tax revenue. Among these are our superbly trained, educated, diverse and hardworking people who can be leveraged through 1) the division of labour to find efficiencies in task execution and 2) our specialized technology which the City uses to get current jobs done over the wide area of the city. Additionally, we have 3) our high credit rating that allows us to borrow at lower costs; and 4) our wider range of profitability due to some taxes being paid to ourselves. These public assets and competitive advantages are part of our common wealth which should be leveraged and maximized for the benefit of all. Increasing our shared common wealth is one way to build a better and more livable city.

The basic ideas is that when the cost of our extra effort in one of our core City services is less than the total cost to another institution for that same work, the City can offer to do the work for the other institution. In such a case the agreed upon price would be somewhere between the City’s extra cost and the third party’s total cost The City can, thereby, make money and the other institution can save money. This profit for the City will expand our services capacity while reducing the total cost of our service delivery. This means that the City will be able to provide more and better services at lower per unit costs. This is a recipe for better services with a downward pressure on the need to raise the tax rate; this is a recipe for City Council moving forward together.

Jeff McLaren, Councilor Meadowbrook-Strathcona

Added on: May 8, 2015
By: James Jeff McLaren
© 2008 - 2018, James Jeff McLaren