by Colin Smith
The Town of Morinville is facing a $260,000 budget shortfall due to lower than anticipated growth and reduced property assessments.
The revenue gap is reflected in the draft Property Tax Bylaw that came before Council at its regular meeting Tuesday, which included a tax increase more than three times greater than called for in the 2021 budget.
However, Council has already signalled it will not approve such a substantial increase, requiring the Administration to find ways to reduce the shortfall.
As set out in the budget passed in December, the Town needed to raise $14,317,689 through taxes in 2021, $10,559,604 for municipal operations and debenture debt, and the remainder for education, Homeland Housing and designated industrial properties.
To provide the necessary funds Council decided on a 1% property tax hike, a reduction from the proposed 1.5% increase set out in the budget when it first came to Council in October. Councillors also decided to maintain the split between residential and non-residential mill rates at 1.1, rather than increasing it to 1:15, in line with Morinville’s Long Term Financial Plan.
Accordingly, assessment notices were sent out to Morinville property owners in February, with tax notices to follow once the tax rate is set.
But the anticipated assessment proved to be off the mark.
Real property assessment growth, including new properties and real improvements to properties, was forecast for budget purposes to rise by 1.5%, compared to 1.45% the previous year. In fact, growth was about 1.42%. Overall market adjustments decreased by 2.13%
Total taxable assessments decreased by $9,496,980 for 2021, resulting in a property tax take of $261,945 less than required.
The 2021 Property Tax Bylaw drafted by the Administration and brought to Council Tuesday included a 3.6% increase rather than the budgeted 1% to make up the shortfall.
With the 1% increase, the owner of an average residential home valued at $332,696 saw an increase of $2.08 per month or $25 annually, rather than $37, for a property tax bill of about $2,524 for 2021.
A 3.6% increase would mean that the homeowner would pay about $95.95 per year, including $83.98 in municipal taxes, $10.40 per year in education taxes and $1.56 per year in taxes for Homeland Housing.
Council gave the tax bylaw first reading Tuesday with the Second and Third Reading to occur in May.
“The Administration’s job is to take the budget revenue number, as decided by Council, plug in assessment values and the associated tax rates kind of spit out the other side,” Mayor Barry Turner said in the discussion. “Having said that, the results have been very surprising based on these assessment changes. Now we have to take a bit of time to regroup and consider where we can make some changes going forward.”
Councillor Stephen Dafoe subsequently moved that Administration come back to Council before its second reading with a list of potential budgetary adjustments to address the reduction in assessment rates.
He requested that when considering budget adjustments Administration factor in an additional $500,000 that Morinville will receive as a result of a new recreation agreement with Sturgeon County finalized the previous day and savings in staff costs resulting from the closure of the Morinville Cultural Centre until September.
“Council, we all know what we have to do,” Dafoe said in support of his motion. “A one per cent increase is one thing, but a much larger increase at this time…I’m appreciative of the Mayor and all of you going back and seeing where we can make adjustments to reduce the burden on all of us, residents and business owners in town.”
Councillor Sarah Hall also spoke in favour of the motion.
“We all know that we would not have a good feeling with passing this tax bylaw as is,” she said. “I’m glad we’re looking for solutions moving forward to ease what is already a difficult year for everyone.”
The motion passed unanimously.
Councillor Scott Richardson then put forward a motion seeking information from the Administration about the financial impact of potentially increasing the split between residential and non-residential taxpayers to 1:2, without taking in more tax dollars from the non-residential sector. This motion implies a drop in the tax paid by non-residential property owners.
Richardson noted that increasing the split mill rate has been a priority for Council.
“If things lined up, we could increase the split mill rate without causing undue hardship or extra stress on the businesses in town,” he said. “This is one of those unique opportunities that sometimes present themselves.”
Richardson’s motion was carried unanimously.
The Property Tax Bylaw will come back to Council at its May 11 regular meeting.