Education Property Tax
As you have likely been reading some news stories regarding property taxes I wanted to share a few comments. For those who want some background to the full city budget process and my thoughts on what was discussed last December, I wrote a post that can be found in the 'notes' section which will provide you with my detailed thoughts on our 2016-18 Operating Budget Deliberations.
After the December budget debate, we have to come back in April after the Province has released their budget to make adjustments. The biggest adjustment comes in the form of the education tax requirement. For a full breakdown of what the Provincial Education Property Tax is, please visit the link below: http://www.edmonton.ca/residential_neighbourhoods/property_tax_assessment/education-tax.aspx
We also make small adjustments on our end based off what has taken place in the first few months. Typically the change on the city side of things is minimal but for this year, Administration had brought forward a proposal that would have let us drop the property tax rate from the originally approved 3.4% to 2.8%. Due to some unexpected changes in the Provincial budget, this change did not happen.
I should note that I'm not suggesting that we blame the Province but rather I simply want to provide the information so you understand why the drop to 2.8% did not take place. In the Provincial budget last fall there was an increase to Edmonton's portion of the Municipal Sustainability Initiative (MSI) funding - approximately $20 million. Since it was in the Provincial budget, a decision was made by Council in December when we were debating our budget to not take the 1.5% for the Neighbourhood Renewal Program as the increase in MSI funding combined with some favourable cost savings would allow us to make up the difference for 2016 and 2017 and pass on those savings to those that pay property taxes. With the release of the Provincial budget last week, that increase in MSI funding was no longer there which left us in a challenging situation because we created our budget based off the fact that the fall budget had an increase in the MSI funding. This change meant that we had a decision to make today, we could look at a minor slowdown to the Neighbourhood Renewal Program (ex: 1 or 2 communities on the list may have to be pushed back by a year) or we could use the savings found by Administration that would have originally allowed us to drop the tax rate to offset the drop in Provincial MSI funding and keep the program running as has always been the case. Knowing that although a great deal of progress has been made since Neighbourhood Renewal started back in 2009, we still have many communities in desperate need of proper maintenance so I chose to support the Mayor’s motion to use the savings that our city Admin found to fill that gap in Provincial MSI funding.
The other area that needs to be discussed is the Provincial Education Property Tax as listed above. Every year we go through the same process, our Administration does their best to budget what the Province will request for their budget and then in April after the budget is released, we make adjustments as necessary. Last year we had great news in that the amount the Province had requested was less than what we put in our budget which allowed us to reduce the residential property tax rate to 2.1%. Unfortunately this year the situation was reversed. Specifically the Provincial budget asked for an $153 million increase for the Province-wide Education Levy. To the average homeowner in Edmonton, this results in an 8.7% increase to the residential Education Property Tax which means that residential property tax overall will now be approximately 5.0%.It should come as no surprise that I think this process around the Provincial Education Property Tax is flawed. The fact that municipalities across Alberta have to budget for this without any real information creates this challenge every year where the total property taxes that we each pay can fluctuate dramatically from what Council approves in December. What's the solution? Well the Mayor suggested today that maybe the Province should consider eliminating the MSI funding and the Education Property tax as a way to try to provide greater stability to the budget process for municipalities. I hope this information helps and if you have any questions, please let me know.
Written by Andrew Knack
