Town continues discussion on possibility of splitting tax rate

by Colin Smith

Town Council has taken another step on the path to a possible revamp of Morinville’s tax policy to raise the rate paid by non-residential property owners.

At its October 9 meeting councillors voted to receive as information the Property Tax Scenario Analysis developed by the Administration.

Presented by Shawna Jason, Director of Corporate and Financial Services, the analysis outlines several five-year tax plan scenarios that are intended to guide discussion leading toward policy development and budgetary tax revenue decisions. It follows the presentation of a long-term tax strategy “road map” to Council at its September 18 committee of a whole meeting.

The document sets out taxation issues on which council will need to make decisions, in addition to setting tax rates to provide revenue required to fund long-term needs.

Foremost among them is whether Council wants to move to a split tax rate, to generate additional tax dollars from non-residential property tax owners, from the current equal rates. If so, to move them to the level of the regional average, currently 1.84, or more or less?

Morinville is the only municipality in Alberta that charges the same tax rate to non-residential properties as it does to residential properties.

A further question is whether the smaller and larger businesses should be assessed at different rates and what those rates should be.

Council is also being asked to consider whether tax rates should be linked to budgetary factors such as inflation, the cost of growth and service level increases, and payment for service enhancements for sustainability.

Linking tax increases to replacement and maintenance of capital assets and the procurement of new capital assets is also a consideration.

The six scenarios presented to Council are based on two variables taken over a five-year-period, the equalized annual tax dollar and the residential and non-residential split rate to be reached based on the regional average to be phased in.

The figures are based on the $334,000 average value of a Morinville residential property, with an annual municipal tax payment of $2,323 in 2018, without including education tax and not considering assessment variation.

Scenario 1 deals with the effect of moving to a non-residential split of 1.84 over a five-period, without increasing the residential tax rate. In this scenario, Morinville would collect $881,180 in additional tax dollars over the 2019-2023 period.

In Scenario 2, there is a one per cent tax increase with no increase to the non-residential split. Averge residential property tax rise to $2,441.50 by 2023 and the Town would gain $473,827. This option is considered to likely be insufficient to cover Morinville’s budgetary needs.

A residential tax increase two per cent combined with a move to a 1.25 split is examined in Scenario 3. This would provide “low to medium tax revenue” with an extra $1,256,358 taken in.

Scenarios 4 and 5 show the effect of three per cent and four per cent increases to put the split rate at 1.5. Under these options, residential property owners would be paying, respectively, $2,662.99 and $2,826.28 in 2023, and $2,039,673 and $2,650, 617 would be collected by the Town.

The effect of a five percent increases over a five-year period, and an increase to a split rate average of 1.84 is outlined in Scenario 6. Here, Morinville would be richer by an additional $3,690, 986, while homeowners would be paying $2,964.80 at the end of the five year period.

In council’s discussion of the analysis, Mayor Barry Turner said the information provided showed that not going to a split mill rate would lead to undesirably higher residential rates.

“We still do want to maintain the business-friendly environment,” he added.

Council planned to have further discussions of the tax proposals during its 2019 Budget retreat this week.

A motion by Councillor Stephen Dafoe that the taxation issues be brought out at Council’s October 16 committee of the whole meeting was also passed.

Morinville Chief Administrative Officer Stephane Labonne noted the Town had received a letter from Morinville Chamber of Commerce stating its opposition to a non-residential property tax rate increase.

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