The well is drying up
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Jun 12, 2013  |  Vote 0    0

The well is drying up

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Municipal ratepayers are tired of being regarded as bottomless wells of cash.

The culprits are not municipal councillors. With few exceptions, these people make every effort to keep property taxes at a reasonable level – after all, they pay their taxes, too. They are more aware than most of the pressures municipalities face to maintain infrastructure and services on a very strict budget, and they take their municipal responsibilities seriously.

The culprits are the arbitrators, mediators and judges who determine financial settlements against municipalities.

One such settlement that comes to mind is the $30 million claim filed by two sisters against the municipalities of Scugog and Oshawa. Both suffered devastating spinal injuries in a 2004 car crash, and after a lengthy appeal, the courts decided in their favour. In this case, the municipalities and the driver herself were each found one-third at fault. There have been situations where a municipality named in a lawsuit is found to be only one per cent at fault but still ends up paying the entire settlement.

The way Ontario law works, if one or more entities named in a lawsuit is unable to pay, those with deeper pockets must cover their share. Municipalities and the companies that insure them have been fighting the deep pocket principle, and we keep hearing changes are coming. Meanwhile, municipalities are upping their insurance coverage and paying higher premiums, knowing huge settlements for catastrophic injuries have become the norm, as has naming municipalities (deep pockets). However well deserved, those massive claims have outpaced municipalities’ ability to pay.

Another situation making the headlines is the arbitration process that determines how much police and full-time firefighters are paid in this province. Prohibited by law from going on strike, their contracts are decided through a mediation and arbitration process.

Municipalities have seen a pattern of pay increases that outpace not only similar contracts in the private and public sectors, but the cost of living. This is happening at a time when many cities and towns have seen industries close their doors, resulting in higher unemployment rates and a reduced tax base.

In deciding pay increases, arbitrators tend to compare one emergency service with another, and not with other municipal contracts – not so much apples to apples, but golden delicious to golden delicious. The idea is pay has to be comparable with other emergency services to keep highly skilled and well-trained personnel from jumping ship.

Although consideration is given in legislation to a municipality’s ability to pay, this has largely been disregarded. Some recent multi-year contracts that have left municipalities begging for mercy include a 27 per cent increase for Scugog firefighters, a 20 per cent increase to Stratford firefighters and dispatchers, and an 11.7 per cent increase for Windsor police.

As was stated in a 2011 Association of Municipalities of Ontario position paper on ability to pay, “Historically, many arbitrators have taken the position that governments have an infinite ability to pay simply by raising taxes or running deficits. This ‘unwillingness to pay’ instead of ‘inability to pay’ is the same theme that emergency services unions and associations have trumpeted at the bargaining table…”

Continued on page 5

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