Letter: The Importance of Competition

“Competition is the keen cutting edge of business, always shaving away at costs.” – Henry Ford

A town, while not a business, still needs to compete. A town competes for residents, businesses, and thus tax dollars. We often talk about past performance within Morinville, but it’s more important to compare the town against the competition because we need to ensure we are providing the right services at the right price to attract to new residents and businesses.

Morinville currently has some challenges in providing the right services. We don’t have a pool, a rec center, a connected trail system, and in 2 years we won’t have a hockey rink as our current one will be condemned. We have a significant deficit in recreational infrastructure in Morinville compared to similar towns in Alberta. This greatly reduces our ability to compete on quality.

In the business world, this would be called a ‘low quality, low price’ strategy. Take the ‘bells and whistles’ out of your product, and sell it for as low as possible. Personally, I don’t agree with this strategy for Morinville and I’d rather pay for some bells and whistles, but personal opinion aside, it’s a valid strategy, with one exception.

Morinville isn’t anywhere near ‘low-cost’.

Mill Rate Comparison

Morinville has had one of the highest residential tax rates of any comparable community, second only to St. Albert. In the business world there isn’t a ‘low-quality high-price’ strategy. That lack of competitiveness is called ‘imminent bankruptcy’.

Ask your candidates if they have the desire to compete with other communities instead of just looking for a ‘personal best’ performance. Demand that candidates tackle the high staffing expense per resident, the high operating loss of the cultural center, and the continual cost overruns from projects like the new town hall. Morinville desperately needs to shave away some costs in order to compete, and we need a council that recognizes a ‘high-cost low-quality’ strategy isn’t sustainable.

Let’s make sure our town can compete.

Sean Strang

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  1. In writing this article, I compared the tax rate in Morinville to communities in the Edmonton area that would be seen as alternatives to the town.
    Seven communities in total were analysed, and their mill rates since 2008 were recorded. As stated in the article, Morinville is second only to St. Albert for highest Mill Rate.

    The chart is available here: Mill Rate Comparison

    *MorinvilleNews has not verified these numbers, and I take full responsibility for any errors or omissions, although all rates were confirmed either from tax bylaws or emails directly from town administration.

  2. I could not have said it better myself! High taxes and low value for them will definitely not make Morinville a residential destination of choice. Something for residents to keep in mind when casting their vote two weeks from now.

  3. I love this idea, I hadn’t looked at it from this perspective . Thanks Sean for your insight .

  4. An interesting letter that I believe outlines one of the underlying challenges that our town faces. I said some time ago that our town’s current level of staffing (and I read something about hiring more people) is unsustainable given our population level and hamstrings us from doing other things.

    You are correct in saying that we need to come up with ways of attracting people and businesses. I also agree that our town needs to get a strong grip of large capital expenditures. The cost overrun for the civic plaza renovations was unacceptable, yet caused nowhere near the uproar that I thought it would.

    The only point I would ask for clarity is that you say you would pay more for some bells and whistles. How much more? Servus Place increased St. Alberts’ taxes significantly and they have a lot more business and industry to draw upon. I’m willing to pay a bit more, say 5%, but not a lot more.

  5. It is important to view all services that we receive for tax dollars to give the mill rate levied a true comparison to others in capital region.
    If roads are cleaned more, or we provide more programs, or sponsor more activities, then perhaps mill rate if fair.
    The question now, is, is that the case!!!!

  6. Where to start? While we may have the second highest taxes in the capital region( or not ) the Mill rate in isolation cannot be used to determine this. The mill rate is only one element that comprises the tax bill. You also need to multiply the market value of the home to determine the taxes. Say an exact home in another community is valued at $30,000 more than the same home in Morinivlle. That would result in a lower mill rate to receive the same amount of tax $s for the same house in Morinville.
    Another reason we have a higher mill rate for the residential properties is that Morinville does not have a split rsidential/non residential tax rate. In other words a dollar of assessed value whether you are a home or a business is a dollar of assessed value. Some Municipalities have a much higher mill rate for their commercial businesses thereby subsidizing the “mill rate” of their residential taxes. Not very business friendly in my view but certainly a more left wing point of view to charge businesses more. Therre is a plank for any candidates economic platform. You are welcome.

    One last point I will make (and there are many others) is that we do have a very high residential/non-resident tax split in our community. Around 93/7 is memory serves. To achieve even the same level of services that a community ( Fort Sask for example is around 33/66 residential / non residiental)we by default need a higher mill rate to compenstate for the lack of commercial / business tax. We have a dog food plant in our community that generates significant odor and fort Sask has a couple of rather unsigthly upgraders in their corporate boundaries. That is the cost of economic diversification to acheive a better residential / non residential tax ratio. CAn’t have it both ways unfortunately. This perhaps could/ should) start a discussion about Morinville reverting back to Hamlet status and moving into Sturgeon countty much like Sherwood Park is a hamlet. Instatly solves a lot of issues regards planning and development as well as proper tax allocation but that is a much larger discussino for another day.

    Sorry for the long diatribe but during an election compaign I thought getting a few facts in the way of those that would use hyperbole and fear mongering to get a few votes. was in order. In short, using the mill rate in isolation is a mugs game and is commonly used by those who would use selective information to make their argument. I have no doubt we are amoung the highest taxed communities in the Capital region but the mill rate is not the cause.

  7. I strongly disagree Lloyd. The point of the article was that we have backed ourselves into a difficult corner because of exactly the attitude you are expressing. ‘Comparison to other towns is too difficult, this metric isn’t quite perfect so we’re going to ignore it entirely’.

    However, even in your comment you mention that Ft Sask has low taxes, and it’s fairly well known that St. Albert has high taxes. Surprise surprise, the graph shows the same. If you have an alternative to measuring competitiveness, I’d love to hear it. If your solution is to ignore competitiveness because you can’t figure out how to measure it, I’d say that wrong-headed.

    The numbers are valid. Ignoring the effect of competition and refusing to compare ourselves to other towns because “it’s too hard” isn’t going to help the town. It may make for quick and easy short term politics, but it doesn’t build long term solutions.

    I do agree with your prosed solution of reverting back to a hamlet, as this is the direction the Alberta government wishes to steer and seems to be a much better way to manage tax dollars. It doesn’t change the fact however, that Morinville needs to compare itself to other communities to see who is implementing ‘best practices’ and to copy those. Nobody operates in a vacuum.

  8. Sean I’m not going to get into this with you again. You and I have discussed this at length and we have agreed to disagree. But…I have never said comparing ourselves to other municipalities is difficult. Just go on the Municipal Affairs website and you can pick any metric you want to compare Munis. All I have pointed out here is that choosing one small sliver of the available information ( Mill rate) to create a cause of mis-information is easy to do no matter what the motivation is. Having said that, given your continuing concerns about the Towns finances, your accounting background and commitment to the Town through this forum I was disappointed that you decided not to run for the council. You ideas and pearls of wisdom would certainly have been welcome. And…I assure you the Town of Morinville is not backed into a corner.

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