SUNDRE – Although the municipality’s portion of the 2023 residential tax rate bylaw is technically a little lower than last year, some property owners might nevertheless anticipate a slightly higher tax bill as a result of other variables such as requisitions and increased assessments.
In December, council approved the municipality’s 2023 operating budget, which essentially amounts to the first step in calculating the tax rate, Chris Albert, director of corporate services, said during the regular April 11 meeting.
The municipality must then wait for an independent, third-party assessor to conduct a complete valuation of all the properties in town, as well as the requisitions from the provincial government for education, Mountain View Seniors' Housing (MVSH), and provincially designated industrial properties.
“With all of that information, we can then put together the tax rate bylaw,” Albert said.
The 2023 operating budget projects total expenditures in the amount of nearly $9.1 million, with operational revenues generating a little more than $5.1 million.
That left an outstanding balance of more than $3.9 million to be recovered either from taxation or through other various avenues available to the municipality such as franchise fees, he said, adding administration eventually determined about $3.5 million would have to be raised through taxes.
Albert emphasized that the part of the bylaw he was addressing dealt only with the municipality’s portion of the overall mill rate.
“The requisitions are in the bylaw, but those numbers are outside of our control,” he told council.
The town’s 2022 property assessment value as listed in the bylaw is about $416 million, but does not include non-taxable properties. Including those properties, the municipality’s overall assessment value in 2021 was about $443 million, and went up a little more than $28 million to reach $472 million in 2022, which Albert called “a very significant increase.”
However, the bulk of that amount – about $26 million – was the result of inflation, he said, adding the remaining roughly $2.6 million represented actual growth.
“That is where we want to see bigger numbers, because that is what helps our tax base,” he said. “Unfortunately, inflation growth doesn’t overly help our tax base because it’s usually across the board.”
Broken down into percentages, he said the assessment increase was about six per cent inflation and only about one per cent growth.
“Inflationary pressures have caused our budget to increase,” he told the Albertan in response to follow-up questions.
“Because of the way the mill rate is calculated – total budget divided by total assessment – the increase in assessment has caused the mill rate to decrease. The percentage of assessment increase being greater than the percentage of budget increase, results in a lower mill rate.”
But that does not necessarily translate to a lower tax bill.
“This rate decrease affects each individual property owner differently as it depends how much that specific property value changed in relation to the greater total assessment,” he said.
“I know a lot of people like to kind of use an average,” he told council. “However, I find that first of all, nobody actually has the average value; second of all, that average value tends to change year over year.”
So Albert’s preferred methodology involves selecting several specific example properties of varying assessment values to show how the new tax rate bylaw will affect them on more of a case-by-case basis.
Drawing from one such example, a property that last year was valued at about $265,000 with a revised and increased assessment of about $289,000 – representing a jump of about $23,000 or 8.89 per cent – Albert said that property owner will see the town's portion of the 2023 tax bill go up to $2,196; or a roughly $75 bump from $2,121 in 2022. Percentage wise, that represents an increase of 3.56 per cent, he said.
“So, it is actually less than their valuation increase,” he said. “What I’m trying to illustrate is, there is not a direct line between the budget and what will come out of individuals’ pockets at the end of the day.”
The owner of a property with a more substantial assessment value increase will by extension also see a bigger jump in their taxes. Conversely, a property whose assessed value has remained essentially the same might see a small reduction in their tax bill, he said.
“It does change quite a bit depending on how much a single property has changed in their valuation versus other properties versus what the overall inflation growth has been applied to,” he said.
The 2022 residential and farmland tax rate was set at 7.99, while the rate proposed by administration for this year was 7.60.
“So, our tax rate is actually going down,” he said, reiterating that other variables factor into what kind of impact that will have for any given property owner.
“Some people will see it go down; but a lot will see it go up,” he said.
The municipality must also collect requisitions for provincial education through the Alberta School Foundation Fund as well as MVSH and provincially designated industrial properties.
“We don’t have any say in what those amounts are,” he said, adding those numbers have been “fairly consistent compared to last year.”
The 2023 residential and farmland rate for education funding is 2.41, while the rate for industrial properties is 0.07. However, the requisition for MVSH increased to almost 0.39 from a little more than 0.36 last year.
“So residents are aware, they are going to see an increase in their tax bill just because of that,” he said.
Upon concluding his presentation, Albert said administration sought to have the bylaw approved.
In the absence of any ensuing questions or conversation, council proceeded to give the tax rate bylaw all three readings.
The total 2023 tax rate for residential properties, which does not include the designated industrial rate, is 10.40.
The town’s non-residential as well as machinery and equipment tax rate is 11.22, while the school fund rate in those categories is 3.65. Rates for designated industrial properties and MVSH are the same as residential and farmland. The total mill rate for non-residential is 15.33.
