Fiscal Imbalance Saugeen Shores & Kincardine Compared

 

Fiscal imbalances seem to be everywhere these days ---even in Saugeen Shores.

If it isn't Ontario complaining to Ottawa, it's Newfoundland  ... or Toronto or a lobby group.

Might as well join the chorus, as Deputy Mayor Doug Freiburger and Coun. Victoria Serda tried to at a recent council meeting.

Prior to amalgamation of Southampton, Port Elgin and Saugeen Township, were among nine municipalities sharing in "impact grants" based on the impact the giant Bruce Power nuclear power plant had on their community.

Port Elgin alone, in 1997, received close to $300,000 in impact money. Southampton and Saugeen Township received about half that, money that has since found its way into Kincardine's revenue stream.

Those grants also pre-dated the privatization of Bruce Power and leasing of the property by Ontario Power Generation to the consortium that runs Bruce Power today.

So there seems to be a reasonable case for a "fiscal imbalance" between Saugeen Shores and Kincardine, among others.

Most people are happy to have Bruce Power. It has created a huge labor pool and brought many amenities to the area. Overall, Bruce Power has demonstrated that it is a good corporate citizen. But with all those new jobs come more people, more housing and more pressure on roads, sewers, water, education, medical facilities and a myriad of public services already under stress.

Bruce Power is the renter. OPG is the landlord. So OPG is on the hook for property taxes or payments in lieu.

In this new amalgamated world, Kincardine reaps all the tax benefits of having Bruce Power within its borders.

Saugeen Shores gets none of the tax benefits, only increased infrastructure costs.

Over time, Saugeen Shores taxpayers will pay higher taxes as it becomes more of a bedroom community with little or no increase in its industrial tax base.

Three years ago, Carol Mitchell, the Liberal MPP for Huron Bruce, seemed to agree that this was unfair and any new deal would rectify the situation. But so far nothing has changed.

Meanwhile Kincardine seems awash in funding, to point where there is confusion over how to spend it.

But there's more:

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Kincardine also cut a sweetheart deal with Ontario Power Generation to support OPG's desire to build a Deep Geological Repository (low-level nuclear waste dump).

In the first year Kincardine received a lump sum payment of $1.3 million and annual payments of $650,000 indexed until 2034. It also gets a second lump sum payment of $1.3 million in 2013.

Saugeen Shores shared some of this deal, but always seemed on the outside edges of negotiations, as did other nearly communities in Bruce County.

Over the 35 years of the agreement, Kincardine's take is $21 million, while Saugeen Shores gets $8 million.

Still, the really big number is tax benefits

The new Electricity Act removed the ceiling on Payment In Lieu (PIL) revenue and, as a result of amalgamation of Kincardine, Tiverton and Bruce Township property tax payments related to OPG property rose to $2.1 million from $1 million.

On April 14, 2004, Kincardine agreed to a back taxes deal with OPG in the amount of $14 million, nearly three times the tax collected from Saugeen Shores property owners in one year. This was for taxes from May 1, 1999, to Dec. 31, 2002.

OPG appealed its property assessment at the Bruce site, as well as Darlington and Pickering.

As the appeal process moved along, Kincardine continued to take in annual revenue based on the original post amalgamation revenue adjusted for tax rate changes. It retained the balance to a new "Omitted Assessment Reserve Fund"

As of Dec. 31, 2002, the town had retained $4.6 million and earmarked $1 million to the Kincardine Community Medical Clinic and another $1 million to an Arts Facility Reserve Fund. Another $1.5 million went to a downtown revitalization fund and $1.1 million for catch up of various roads projects "over the next few years."

By January 2005, the settlement amount had risen to $14.8 million.

So Kincardine moves along continuing to reap all the tax financial benefits of having Bruce Power inside its borders. And Saugeen Shores continues to miss out on its fair share of the benefits.

Now is the time for the Saugeen Shores council, the Chamber of Commerce, and any other group that cares about the town's financial future, to fight for the town's share of these benefits.

That's the only real way the community can continue to grow and prosper without unduly punishing ordinary homeowners. It's all about balance and fairness.

Wayne MacDonald