Civil Thoughts Series, No. 14
Courier Weekend (St. Stephen, NB), 31/26, A-5, 15 August 2008
The Town of St. Stephen raises approximately 20% of its revenues from user charges. Charges for provision of water and sewer account for 18% of revenues, and the other 2% are comprised largely of charges for fire dispatch and building permits, with additional minor revenues from charges for parks use, recreation programmes, use of playing fields, animal licences, business permits, and airport hangar use.
The major advantage of user charges is that they are under the control of the municipality. A further advantage is that they are specific to the service provided and, hence, easier to justify and explain than the nature of the generation of operating funds from the property tax.
The property tax rates are also, of course, under the control of the Town, but assessments are not, and, moreover, resistance to an increase in the property tax is invariably strong and complicated politically. The Town has virtually no influence, without engaging in coordinated lobbying with like municipalities, upon the provision of grants from senior government.
The major disadvantage of user charges is that, if not implemented fairly and carefully, there will be resistance that may cause political friction, invoke general or localized critical outcry, or induce negative elasticity in the user group.
Two other methods municipalities employ to recover cost, specifically for the servicing of new subdivisions, are development charges, also known as local improvement charges, and service fees, also known as user fees.
St. Stephen does not employ development charges. St. Stephen has one of the highest property tax rates in the province, and has hardly increased it during the last seven years. One reason the rate is high is because St. Stephen has a geographic footprint that is very large relative to its population, a result of the forced amalgamation of Milltown with St. Stephen in 1973. Hence, the transmission, distribution, and delivery of services travel over greater distances (and elevations) between and to citizens and dwellings than is usual.
This does, however, provide theoretical opportunities for greater densities of development. But, in addition, the Town has one of the lowest average property assessment base in the province, due largely to demographics of depressed incomes and lower than average educational attainments. These facts also tend to rule out imposition of local improvement and development charges.
There is, perhaps, room to move for some user charges, especially those for utilities and for solid waste collection. User charges are not currently imposed on:
- garbage collection;
- building inspection;
- development office services (e.g., subdivision development);
- airport usage other than hangars;
- enforcement of those by-laws without fines or penalties;
- information and research services from Town Hall;
- a number of recreational services;
- parking permits; and,
- out-of-town users of services (e.g., recreation) or facilities (e.g., library), i.e., differentials.
Historically, however, the Town has concentrated its user charges largely on the concept of public prices, supplementing these by a variety of considerably lesser service fees, and not having had much interest in revenues from specific benefit charges.
The Town’s philosophical bias has consistently been for equity orientation of services, and even a partial, if measured, move to efficiency orientation becomes practical only if it is seen to be without damage to the established principles governing equity.
In addition, recent amendments to New Brunswick’s Community Planning Act that relate specifically to the municipal ability to levy a range of fees for the development of subdivisions will to some extent provide a revenue yield not from operating funds. However, the yield is compromised by the Province’s concurrent interposition of professional planner requirements in any such processes—at the cost of the municipality.