Something for Nothing

I've been struck recently by all the debate surrounding regionalization, particularly in the Greater Saint John area, and the rhetoric has really heated up lately between the City of Saint John and the Town of Rothesay. I recently read a statement in the Telegraph Journal by Rothesay Mayor Bill Bishop that really caught my attention:

“The suburban mayor said he didn't see how Rothesay would benefit from an amalgamation, which he said would drive up the costs of the town's services.”

While the topic of amalgamation is different than regionalization, the rationale is similar and the suburban mayors have been quoted as making similar arguments about regionalizing services with Saint John. And he's right. I'm certain the price of the town's services would go up.

But here's the kicker: Saint John has been silently subsidizing the cost of Rothesay's services for decades.

In a recent article written by Daniel Bourgeois and David Gingras, they go on to describe how major reforms in the 1966 Equal Opportunity Act made huge strides in equalizing services to cities and towns around New Brunswick but, in the following 45 years, very little has been done to correct the remaining inequalities that continue to penalize cities like Saint John. They used the following “fictional but realistic” example to illustrate their point (modified from a Moncton example to a Saint John example for relevance):

“Let's give an example to illustrate the mess we are in. 

Joe lives on Rothesay Road, at the eastern extremity of the City of Saint John. He shops at the Sobeys at McAllister Place, uses Rothesay Road and Rothesay Avenue to get to work at Kent, and attends all the Sea Dogs games at Harbour Station. 

His twin brother, Jim, lives next door, shops at the same grocery store, uses the same roads to get to work and back, and accompanies Joe to all the Sea Dogs games at Harbour Station. They both live urban/suburban lives and both have common urban/suburban complaints, such as the absence of sidewalks, access to municipal water and sewer, and the time it takes for snow plows to clear the road in front of their houses. 

They own identical three-bedroom bungalows, and both houses are assessed by Service New Brunswick evaluators at $150,000. Joe pays $2,668 per year in property taxes, while Jim pays $1,785. How is that possible? Where is the equality? 

The explanation is simple: Joe lives within city limits while Jim lives two metres north of the city boundary. The city's property tax rate is $1.785 per $100 of assessment, while Rothesay's property tax rate is $1.19 per $100 of assessment. 

In principle, the rates should reflect the difference in services. But no one can seriously argue that Joe receives twice as many services as Jim does. In fact, the only key service that Joe has that Jim does not is the right to vote during municipal elections every four years. 

Democracy comes with a price, but $3,500 more over four years for that right is steep.”

And even on the point of democracy, it is not that cut-and-dried. As Dave Drinnan points out in his recent blog post “To Whom is the City of Saint John Responsible”, the suburban communities feel a sense of entitlement in the governance of Saint John as witnessed by all the comments posted to articles in the Telegraph Journal and even signed petitions to directly influence the politicians on their policy decisions. So, why is this?

Plain and simple: the City of Saint John is providing services to their suburban neighbours and the suburban neighbours want a say in the services they receive.

Joe and his brother Jim both drive on Rothesay Avenue to get to work everyday. The roads they use are plowed and maintained by the same muncipal works department. Its the same fire department that responds to an industrial accident at their workplace and the same police force that has to pull them over for speeding to the big game at Harbour Station. The problem is, Joe pays for those services and Jim does not and the City of Saint John provides those services and the town of Rothesay does not.

But even better than the story of Joe and Jim to illustrate this point is to look directly at the data. Here is a graph of Saint John's tax rate since 1971:

And here is the population of Saint John and the surrounding communities since 1971:

There is a clear upward trend in the tax rate of Saint John and a corresponding, although slightly less severe, trend of declining population indicating that the tax rate increased at a higher rate than the corresponding decrease in population. In theory, this could mean, among other interpretations, that the cost to provide the existing municipal services cost rapidly more over the time period or the population was receiving an increased level of services. Ask any resident of the city or read the Telegraph Journal and they will tell you it certainly isn't the latter.

The interesting element in these graphs is that the growth trend in the surrounding communities' population is virtually an identical match to the rise in Saint John's tax rate. I'm no economist or statistician, but that suggests to me that there is a causal relationship between the out-migration of residents to the 'burbs and Saint John's tax rate. And since the overall census metropolitan area's (CMA) population remained virtually constant over the same time period (only a marginal increase from roughly 110,000 to 122,000 over 40 years) we can also say that the level of services in Saint John remained generally consistent with the overall population of the CMA.  

In other words, the City of Saint John continued to provide the same level of services to the residents of the CMA even though many of those residents moved outside of the city's boundaries into the "bedroom communities."

With this data in mind, consider Mayor Bill Bishop's statement again:

“The suburban mayor said he didn't see how Rothesay would benefit from an amalgamation, which he said would drive up the costs of the town's services.”

The cost of providing all the services that his town's residents enjoy are simply not reflected in their tax rate. Saint John has been bearing this weight for decades and Rothesay's (and surrounding communities') tax rate should be adjusted accordingly. Will it be painful? Yes. Will it be fair for all residents of the Greater Saint John Area? Yes. Regionalization is necessary but the mayors of the surrounding communities seem blissfully unaware of the pain that has been borne by the residents of Saint John to provide the 'burbs with their artificially low tax rate. Somehow they shouldn't have to suffer because of regionalization?  Much of the rhetoric from the surrounding communities seems to be based on this lack of realization.

What stings even worse than the lack of regionalization, however, is that Saint John's tax rate has reached a tipping point where residents of the city are escaping to the surrounding communities to avoid paying the high taxes. This becomes something of a "chicken-and-the-egg" situation: people leaving the city has caused the tax rate to increase to the point where more people want to leave the city to escape the taxes. And who wouldn't? Receive all the services you enjoy without having to pay for them? Sign me up! – they're getting something for nothing.  It will be tough for Saint John to ever catch up, no matter what they do or how they manage their money.

To add insult to injury, the 1971 tax rate for the City of Saint John ($1.15) is far lower than the current tax rate of all the towns in the CMA. Meanwhile, the CMA's population remained virtually constant. Given the data above, it isn't difficult to see that the current tax rate of Saint John would likely be much lower than it is today if suburbanization had not occurred to the extent it has.  Its no wonder Mayor Ivan Court favours regionalization and amalgamation if only to get back the lost tax revenue and reduce the tax rate for residents of Saint John.

In the end, the lack of regionalization only hurts the entire community. Saint John is, without a doubt, the life-blood of the CMA and it needs fair compensation for the services it provides to its residents and all the residents of the CMA. Yes, under regionalization some people will pay more and it will hurt and some people will pay less and it will be a well-deserved relief, but in the end the greater region will benefit.  "What is good for the gander is good for the goose," as the saying goes and things may finally be equal among cities and their surrounding communities.  Regionalization is the final step in fulfilling the true intent of the Equal Opportunity Act.