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Tax standoff could derail GO's growth

Nov. 27, 2006. 01:00 AM

The regional politicians on GO Transit’s board are playing a game of chicken with the province.

And when the dust clears, the commuter could be left stranded by an inter-regional transit system unable to build out fast enough to meet demand.

That’s the risk, according to Durham Region chairman Roger Anderson, who also sits on GO’s board.

“There’s all sorts of things that could suffer: expansion of service; all-day service; extra tracks so we can get more trains moving east and west; the rehabilitation of Union Station,” says Anderson.

Here’s the issue:

Anderson and others on the board want to be able to increase taxes (known as development charges) on new residential and commercial developments in their respective regions and use that money to pay their share of GO’s expansion budget.

But they say the province won’t allow the hike, forcing the regions to dip into the property tax base and use other sources to cover the bill.

“Growth is going to be the biggest cause of increased ridership and service on GO,” Anderson says. “As a result, growth should pay for growth.”

Anderson and others say the current arrangement is unacceptable because it punishes existing homeowners who expect their tax dollars to be spent on roads and other infrastructure at home, not on GO service expansions in other GTA locales.

“You’re robbing Peter to pay Paul,” he says. “We should be using (the money) in Durham Region. God knows Durham has less east-west (arterial) roads than any region in the 905.”

Now some GO members say they will no longer dip into the property tax base to meet their GO obligation.

“My council has said that they will not do it. If it’s not been resolved, GO will not be receiving the money they need from York (in 2007),” said York Region chairman Bill Fisch. “I sit on GO. I want the capital (expansion) program to be built. But I can’t support (an) increase in property taxes.”

Peel Region council has passed a similar resolution.

That means: Unless the province allows these regions to up their development charges — or DCs, as politicians call them — GO will get less money than budgeted. That is, if you believe the regions will make good on their threat.

“If we don’t have a new bylaw or we don’t have the authority (to raise DCs), then GO is going to be in trouble,” Anderson says.

For Peel Region, the total GO bill was $16.5 million this year, only 40 per cent of which came from development charges. In York, finance commissioner Lloyd Russell says this year’s GO bill totalled $11 million, of which $5 million came from DCs, $2.7 from property taxes and the balance from a reserve fund that is now drained. Russell says next year’s GO bill may hit about $13 million, and if York’s DC rate remains unmoved, he predicts a shortfall of $8 million.

You quickly see that if the regions do as they say, GO could be out millions.

Meanwhile, the Ministry of Municipal Affairs and Housing is not kowtowing. The ministry’s director of municipal finance, Janet Hope, does not agree that only so-called growth taxes such as DCs should pay for GO.

“GO expansion costs relate both to providing better service for the existing population as well as services that will accommodate new growth in the region in question,” says Hope. “The assumption that development charges should be the sole source is perhaps not what the Development Charges Act was intended to do.”

Nonetheless, the McGuinty government in August announced a provincial-municipal fiscal and service delivery review, and gripes about development charges will almost certainly be aired. But that review is not due to be completed until spring 2008.

And in the middle of it all is GO Transit.

As one GO manager said after a recent board meeting, “We’re the meat in the sandwich.”

The question is: Will the sandwich be leaner next year?