by Ed Cowley, freelancer
Several times the issue has come up at council regarding the Town of Morinville accessing a product or service from outside the community when there was a local business in a tax-contributing property with it available, which didn’t even get a chance to quote a price. Each time staff attributed it to not knowing the service was available locally, noting that businesses have to make the town aware of the products they offer.
Coun. Scott Richardson, who is a local businessman, has raised small business issues several times and even tried to get a policy in place that would give priority to purchasing locally, even if there was a slightly lower price outside the community. However, the policy got so watered down by the time it was passed that it is virtually useless.
Here’s the problem at its essence. Council has hired a series of CAOs who do not live in the community (with one exception several years ago). The CAO brings on board managers and directors who do not live in Morinville, so the top layers of management have little or no knowledge of the town’s business history, services or products. The combination of the new staff not moving into or shopping in Morinville with the purge of managers possessing local knowledge by the last administration has created a desert of local business knowledge at the top of the town administration.
Despite having the issue arise at council, no effective direction has been passed by council.
Here’s a simple solution that can be put in place to help local businesses get consideration for town purchases (until council addresses the deeper systemic failures).
The present system expects local businesses to guess when the town is about to purchase a product or service they carry and to chase down the town staff member who may possibly be in charge of the purchase. Why doesn’t the town simply post a list of products on its website that it will require in the upcoming year so local businesses can register to be contacted for the items and services they would like to quote on when a purchase is being initiated? It will make it easy for town staff to get multiple prices before approving a purchase. While it will require some work to set up, compared to simply having the town staff continue to call whoever they called last year, this will give local businesses who have been left out of the loop a chance to be considered.
There is no public oversight or even public knowledge of town purchases or contracts, which is concerning. However, it should be worth the effort to keep taxpayer dollars circulating to local businesses and paying local staff rather than going directly from the town of Morinville to St. Albert or Edmonton businesses.
The support for local business has to feel less than enthusiastic when businesses look at documents going to council.
On Oct. 11, while considering the taxation policy, the escalation of the taxation rate on business and industrial property was considered. The policy calls for the business tax rate ratio to increase by 5% each year up to 2025 rather than 2026 as contained in the draft policy. The feeling was that a new council would prepare the 2026 budget and may totally revise the strategy. Council was advised that the escalating tax rate would increase taxes on a $1 million assessed business by $2,000 over four years, which appeared to sound reasonable to council.
However, that figure is just fluffy nonsense. The tax rate ratio actually becomes a third variable impacting the tax dollars paid. For example, there is no tax rate ratio applied to residential property, it rises or falls according to the actual tax rate set by council. With businesses, now the intent is to increase the ratio every year so the tax ratio will rise from 110% of the residential tax rate now to 115% in 2023 to 120% in 2024. Then there is the actual tax rate set by council each year—it went up 5% last year. The assessment is the third variable, so that factor can also add a healthy hit on the tax bill for local businesses. The bottom line is that three variables will impact the actual increase in municipal taxes for businesses, and considering one at a time is like trying to sit on three one-legged stools rather than sitting on one three-legged stool.
Council was also presented with figures purporting to show that Morinville businesses pay far less in taxes than comparator cities. The other municipalities were all cities with much higher populations and trading areas. The top three factors in purchasing business real estate are: location, location, and location. While the information indicates Morinville businesses have a lower assessment and tax rate than those in the cities, it actually shows that Morinville businesses are paying very high taxes on a per capita basis to serve the local market. The business assessment reflects market factors.
For example, St. Albert has a population over 69,000 compared to Morinville at just over 10,000. The chart presented as part of the taxation policy documentation shows that compounding the lower assessment in Morinville with its lower tax rate, a $1.9 million assessed business would pay only $16,700 in municipal property taxes. The same business building and property, if located in St. Albert, would pay almost $7,000 more in municipal taxes. So the St. Albert business is paying under 50% more in taxes to gain access to a market more than 600% larger than the Morinville business serves.
So what? So Morinville businesses are not getting the free ride portrayed in the town documentation. What do the figures mean? Nothing practical, as far as taxation is concerned. It just shows that council should not be swayed by tables of figures because the figures chosen are subjective, and the motive of the person or department presenting the figures has to be considered.
Who stands to gain if council decides to jack up business taxes through the use of all three variables?
Council appears to be sincere in trying to support local business. But it will have a difficult time enacting real change to get town staff to take pride in supporting local business so tax dollars circulate back into the community.
Call or email your favourite council member to give them verbal support for the effort to have the town spend tax dollars in Morinville, regardless of whether they are promoting a huge tax increase or no tax increase for local businesses.
