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Paula Arab

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Penny Tax Can Be Transformative Investment

Posted: 11/21/2012 1:56 pm

For every dollar Canadians pay in taxes, just eight cents ends up with municipalities, arguably the level of government delivering the services deemed most important to citizens. No wonder Canadian mayors are on a constant mad dash for more cash. It feels like they are on a treadmill, going nowhere very fast.

In the span of one week, news reports hammered home the fact that our cities are starved for funding. The Federation of Canadian Municipalities released its plan to get billions of dollars from the federal government over the next 20 years. That deal would see cities and towns match federal funds with their own.

A number of mayors, including Calgary Mayor Naheed Nenshi, followed up in person, hoping to make a deal with the Harper government.

Now the federation, which represents 22 member cities, is floating the idea of putting a penny tax on the table, something Transformation Calgary has been proposing for our city for more than two years. And in October, the City of Toronto recommended a one per cent sales tax as one option to funding a much needed transit expansion.

That makes former Mayor Ron Norick's recent visit to Cowtown especially timely.

Norick, a visionary and former mayor of Oklahoma City, shared with Calgarians how he used a one-per cent sales tax to transform his city into one of the most livable in North America. In the late 1980s, Norick recognized the crucial link between quality of life and economic development. Businesses didn't want to relocate to Oklahoma City because they couldn't get employees to move there. Citizens were leaving every day because they didn't have jobs.

He shared how he convinced his city - an even more conservative place than Calgary - to approve a new municipal sales tax for community-building projects - arts, recreation and other quality of life facilities. He did this by showing them the return on their investment, and proving that a tax could be a fiscally conservative tool to fund cultural and recreational infrastructure.

Here is a brief Q & A with Ron Norick:

Q. How did you get people to trust their politicians? Are citizens of Oklahoma less cynical than Calgarians?
A: Oklahoma is no different. I don't think we, the government, do a good job of following through on things. I think what they finally believed, they believed me. I don't want that to sound like I'm bragging. They had to believe somebody. We were somewhat desperate and they needed to believe somebody. I just happened to have the message at the time, and I could really see what I was trying to do. I think that was the key. But, we also had to follow through. I shepherded the project. I did not just turn it over to staff and say: "I'll see you in five years.' I really worked it and worked it hard, to make sure we were on budget, and that we did things the way they were supposed to be done.

Q: Did the tax end after the promised five years?
A: We had a big celebration so that the citizens would know about it. 'The tax is off. Tomorrow morning, no one-cent sales tax.' About two years later, the next one was proposed and put on the ballot.

Q: How did Oklahoma City get a penny tax approved not once, but in two more referendums, one for schools and one for transportation, and with increased support each time?
A: People, when they could see their dollars at work, they did not miss that penny. Just ask anybody.

I don't know if it's the same here [in Calgary] or not, but I suspect it is to some degree. About 30 per cent of the money we collected came from people that didn't live in Oklahoma City. So, I thank all the tourists that come in, I thank anybody that comes into our community, that works in our community, that lives in all those bedroom communities or other parts of the state, that comes and spends their money. They're using our streets, they're using our bridges, so why not make them pay. The best way to do it, is not property tax. They don't own property in Oklahoma City.

Q: How were the projects selected?
A: We started out looking at the buildings that were owned and operated by the city, that were deteriorating. Then we pulled these studies off the shelf that were pretty good studies, but were never funded. We had to start somewhere. The buildings were collapsing around our ears, so we said let's start with those.

Q: What governance model was in place to ensure the funds collected were spent the way you promised? How were the projects approved?
A: All tax moneys had to be spent by city council but, I appointed a citizen oversight, review committee. Every project that came up, came up through that committee, at public hearings. Citizens had big influence in the process but city council is the only one in our city that can allocate moneys.

We also held the money in a separate fund and reported every month how much was being collected. We had the citizen oversight committee that was the first to see (the architectural plans, the budgets, etc.) All those issues were worked out first through that committee. It was a public forum. Anybody could go to it and people did. We even televised it. By the time it got to the council level, we had nothing but nine to zero votes.

Q: Did the tax result in a drop of individual donors or philanthropic contributions?
A: It did just the opposite. We had beautiful facilities. People could see that. If we had deteriorating facilities, then I think you would see contributions go down.

Paula Arab is the executive director of Transformation Calgary.

 

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