December 9, 1999
To: Policy and Finance Committee
From: City Clerk
Subject: CONTRIBUTION REBATE PROGRAM AND ADVANCE VOTING DAYS.
Recommendation:
The Administration Committee at its Special Meeting on December 8, 1999, during its consideration of a report
dated (December 7, 1999) from the City Clerk, entitled "Contribution Rebate Program and Advance Voting Days"
amongst other things, recommended to the Policy and Finance Committee that budgeting for any rebate program in
future years be over the three years of the term of Council.
The Administration Committee reports, for the information of the Policy and Finance Committee having:
(1) requested the City Clerk, in consultation with the Chief Financial Officer and Treasurer, to review and report to the
Administration Committee on the idea of giving a financial incentive to contributors who apply for the rebate to encourage
them to take the rebate in a form of property tax as opposed to a cheque as a cost-savings measure;
(2) received the aforementioned report (December 7, 1999) from the City Clerk; and
(3) forwarded the foregoing action of the Committee to Council for consideration with Clause No. 6 of Report No. 8 of the
Administration Committee, entitled "Municipal Elections - By-law Requirement".
Background:
The Administration Committee at its special meeting held on December 8, 1999, had before it a report (December 7, 1999)
from the City Clerk, reporting as requested by the Administration Committee respecting the impact on the planned advance
voting days given the recommendation to amend the Municipal Elections Act, 1996 to move voting day to the Thursday
after Thanksgiving in October; providing additional information on the impact of adopting the Provincial rebate
percentages for the City's contribution rebate program and the impact of refunding the contribution rebates by way of a
property tax credit versus the production of a cheque; advising that Council has absolute flexibility in the design of the
contribution rebate program; that during the consultations with Members of Council, the majority indicated the existing
program parameters were reasonable; that any decision to adopt the Provincial levels of rebate percentages would cost the
City at least an estimated $1.2 million more than the existing percentages; and while potential savings in cheque
production costs could be realized if the City were to give property tax credits rather than issuing a rebate cheque, it is
doubtful the majority of taxpayers would prefer this option given the time delay in receiving the credit; that additionally,
many contributors are not taxpayers in the City of Toronto and therefore could not receive a tax credit; that should the
Province decide to move voting day to the Thursday after Thanksgiving in October, staff will bring a further report to
Council setting out the revised advance voting days; and recommending that this report be received for information.
City Clerk
P. A. Morris:in
Item No. 6
Sent to: Policy and Finance Committee
City Clerk
c: Chief Financial Officer and Treasurer
_________
(Report dated December 7, 1999, addressed to the
Administration Committee from the City Clerk)
Purpose:
This report responds to a request from the Administration Committee for the City Clerk to review the impact on the
planned advance voting days given the recommendation to amend the Municipal Elections Act, 1996 to move voting day to
the Thursday after Thanksgiving in October. The report also responds to a request for additional information on the impact
of adopting the Provincial rebate percentages for the City's contribution rebate program and the impact of refunding the
contribution rebates by way of a property tax credit versus the production of a cheque.
Financial Implications and Impact Statement:
There are currently no funds budgeted for a contribution rebate program for the 2000 municipal election. Should Council
decide to implement such a program, funds would have to be identified for payment in the 2001 and 2002 budget years. To
date, the City has paid out approximately $1,780,000 in rebates from the 1997 municipal election. The impact of moving to
the Provincial contribution rebate percentage levels could cost the City an additional $1.2 million based upon the 1997
contribution levels.
Approximately 20,000 cheques have been prepared to date for the 1997 rebate program, at a cost of approximately
$800,000. Should every contributor be eligible for and choose to take a property tax credit, there would be a savings of
approximately $600,000 over the cost of producing a cheque. However, as some contributors are not taxpayers in the City
and there is no way of knowing how many contributors would prefer a tax credit over a cheque, particularly given the
timing issues identified in this report, the actual savings would be much less.
There is no financial impact of the potential need to alter the advance voting days should an amendment be made to the
Municipal Elections Act, 1996 to move voting day. Advance voting needs to happen and the costs have been included in
the 2000 operating budget. There is no additional cost to the City if the advance voting period occurs a month earlier.
The Chief Financial Officer and Treasurer has reviewed this report and concurs with the financial impact statement.
Recommendations:
It is recommended that this report be received for information.
Background:
On November 30, 1999, the Administration Committee considered a report from the City Clerk (November 17, 1999)
outlining the mandatory and permissive by-laws Council may enact for the 2000 municipal election.
The Administration Committee is recommending to Council the adoption of the report subject to amending
Recommendation No. (3) to provide the contribution rebate program adopted by the City be similar to that offered by the
Provincial Government.
Staff was requested to determine the impact of increasing the rebate percentage levels to match that offered by the Province
and the impact of refunding the contribution rebates by way of a property tax credit versus the production of a cheque as it
has cost the City $800,000 to date to issue cheques for the 1997 rebate program.
The Administration Committee also considered on November 30, 1999, a report from the City Clerk (November 17, 1999)
on the necessary legislative amendments to the Municipal Elections Act, 1996 that would improve the administration of the
election process. In recommending the adoption of the report to Council, with amendments, the Committee directed the
City Clerk to review the impact on the planned advance voting dates given the recommendation to move voting day to the
Thursday after Thanksgiving in October.
Comments:
1. Impact of Using the Provincial Percentages in a Contribution Rebate Program
The City of Toronto 1997 contribution rebate program provided rebates based upon the following formula:
a) for contributions $100 or less, 75 percent is rebated;
b) for contributions more than $100 but less than $400, $75 plus 50 percent of the difference between the total contribution
and $100;
c) for contributions over $400, $225 plus 33 1/3 percent of the difference between the total contribution and $400; and
d) the maximum amount of the rebate is $350 regardless of the total amount of the contributions made by a contributor to
candidates.
Under this program, rebates totalling $1,779,193.26 have been issued to date to those contributors who applied for a rebate.
(Not all contributors applied for a rebate.)
The Provincial program provides for tax credits based upon the following formula:
a) contributions up to $300 receive 75 percent as a credit;
b) contributions from $300 to $1,000 receive a credit of $225 plus 50 percent of the amount over $300;
c) contributions over $1,000 receive a credit of $575 plus 33 percent of the amount over $1,000; and
d) the maximum amount credited is $1,000 (which is obtained when total contributions total $2,275).
Under the Provincial formula, the 1997 contribution rebate program would have cost the City $2,959,631.75, an increase of
$1,180,438.49 over that paid under the existing rebate program.
It is possible, given the incentive in the increased rebate provisions, that contributors would contribute more money to
candidates. It could potentially cost the City more to fund the rebate program if the Provincial model were adopted.
2. Impact of a Tax Credit Versus the Production of a Cheque for Payment of the Rebate
There are two options for the issuance of the rebates - the production of a cheque to the contributor or the provision of a tax
credit for the contributor's municipal property taxes.
Under the former rebate system in the Municipal Elections Act, the rebate was first applied to any debts the contributor
owed the City. If there were no debts, a contributor had the option of either applying the rebate as a credit to future taxes or
receiving a cheque.
In 1997, the rebate program imposed by the Province provided for the rebates to be paid only by way of a cheque. This was
in recognition of the fact that the new City had six different tax billing systems and the associated problems with trying to
properly identify and process those contributors eligible for a property tax credit.
Over 34,000 contribution receipts were issued by candidates during the 1997 municipal election. More than 20,000
cheques have been mailed to date, totalling approximately $1,780,000 in rebates. It costs approximately $40 to create a
cheque under the former City of North York finance department payment system (which was used to run the rebate
cheques).
It is estimated it would cost approximately $10 in staffing costs to process a property tax credit.
From a purely fiscal standpoint, the issuance of a property tax credit would be the more logical approach. However, there
are issues that would make a tax credit not a particularly viable option in the eyes of the contributor.
a) Eligible Recipients of a Property Tax Credit
Under the Municipal Elections Act, 1996, a contribution may be accepted from an individual who lives in Ontario, a
corporation that carries on business in Ontario or a trade union that holds bargaining rights for employees in Ontario. Not
all of these eligible contributors would be property taxpayers in the City of Toronto.
In fairness to Toronto's taxpayers they should be given the option of whether they would prefer a tax credit or a cash
payment.
It would therefore be necessary to have two parallel rebate systems, one for Toronto taxpayers wishing a tax credit and one
for non-Toronto taxpayers and Toronto taxpayers who want a cash payment.
A separate issue that would need to be resolved is if the contribution is drawn on a joint bank account but the property is in
the name of only one of the contributors.
b) Timing
Currently, the Municipal Elections Act, 1996 requires candidates to file their financial statements by January 31 in the year
after the election. The Administration Committee, at its meeting of November 30, 1999, recommended the adoption of a
report on suggested legislative amendments to the Act. Among these is an amendment to provide that the financial
statement be filed by March 31 in the year after the election.
The proposed 2000 contribution rebate program is suggesting that rebates would be paid to contributors after the expiration
of the 90 day compliance audit period after the filing of the financial statements. This means the earliest date the rebates
could be paid to contributors would be May 2, 2001. Should the Province accept the City's recommendation to move the
filing date to March 31, the earliest possible date for payment of the rebates would be June 29, 2001.
Finance staff have advised that the last possible day for inputting information on the tax bills is May 1, 2001, the day prior
to the date for payment of the rebates if no legislated change is made. It would not be possible therefore to process any
property tax credits for the 2001 tax year. Any tax credit could not be applied until the 2002 interim tax bill is mailed in
January with a first instalment date of March 1, 2002.
It is doubtful that many contributors would want to wait this long to receive their rebate.
As an additional consideration, under the proposed contribution rebate program, contributors have until July 31, 2001 to
submit their rebate applications unless the candidate's campaign period is continuing in order to eliminate a deficit, in
which case the application must be submitted within six months of the date of the receipt. These dates do not correspond
with the tax billing preparation dates.
c) Changes in Property Ownership
If a contributor sells his or her interest in the property between the time a property tax credit is applied for and the date of
processing, there is a danger the credit could be applied to the tax account after the property has changed ownership. Some
time may lapse before this matter is brought to the City's attention and it might prove difficult to adjust the account at that
time and locate the contributor to issue a cheque.
d) Need for Roll Number Identifier
In order to process a property tax credit, the City would need to know the roll number of the property to which the credit is
to be applied. While staff can request this information be included on the form, past experience would show that some
people would not complete that part of the form, necessitating City staff to look up the roll number.
It could even be argued that staff should check all the roll numbers as indicated by the contributors to avoid any eventual
problems if a taxpayer has incorrectly given the wrong roll number.
If the contributor owned more than one property in the City, staff would need to contact the contributor to determine which
property was to receive the tax credit if the contributor did not make that information clear on the application form.
e) Software Development
In order to provide administrative ease, an interface would need to be developed between the City's tax billing system and
the contribution rebate program database. It is not known at this time what this interface would cost to develop.
3. Advance Voting Days
In the report before the Administration Committee on November 30, 1999 on legislative amendments to the Municipal
Elections Act, 1996, it was recommended that voting day be moved from the second Monday in November to the Thursday
after Thanksgiving in October.
In the report before the Committee on mandatory and permissive by-laws, it was recommended that advance voting days be
held on various specified days beginning Monday, October 23 and ending Wednesday, November 8, 2000.
If the Province accepts the amendment to move voting day, a number of dates, including the planned advance voting days,
would need to be revised. Should this be the case, a further report would be brought to Council outlining the specific dates
that need to be revised.
Until such time as the Municipal Elections Act, 1996 is amended, staff need to plan the 2000 election under the existing
legislative timeframes.
Conclusions:
Council has absolute flexibility in the design of the contribution rebate program. During the consultations with Members of
Council, the majority indicated the existing program parameters were reasonable. Any decision to adopt the Provincial
levels of rebate percentages would cost the City at least an estimated $1.2 million more than the existing percentages.
While potential savings in cheque production costs could be realized if the City were to give property tax credits rather
than issuing a rebate cheque, it is doubtful the majority of taxpayers would prefer this option given the time delay in
receiving the credit. Additionally, many contributors are not taxpayers in the City of Toronto and therefore could not
receive a tax credit.
Should the Province decide to move voting day to the Thursday after Thanksgiving in October, staff will bring a further
report to Council setting out the revised advance voting days.
Contact:
John Hollins, Director of Elections
Telephone: 392-8019 Fax: 392-1867
E-mail: jhollins@toronto.ca
Novina Wong
City Clerk
List of Attachments:
None.
