- Morinville residents and businesses will experience a lower property tax increase in 2024 due to higher-than-expected municipal assessment values.
- Council unanimously decided to reduce the overall tax increase to 4.45%, down from the approved 5.25%, redirecting additional revenue to benefit property owners.
- The average home valued at $350,000 will see an annual tax increase of $128.40, while the average business valued at $650,000 will experience a $1,282.32 increase.
by Colin Smith
Morinville residents and businesses can expect a lower property tax increase in 2024 as a result of higher-than-anticipated municipal assessment values.
During discussion of the 2024 Property Tax Bylaw at its regular meeting on Tuesday, Mar. 26, council was told that the assessment value increase, determined in February, was 3.88%.
That is up from the estimate of 3% used in determining the tax rate increase set out in the 2024 operating budget.
If that approved 5.25% rate increase was maintained, the amount of tax levied would be $108,949 more than budgeted for.
Council has decided that money should remain in the hands of Morinville property owners through a reduced tax rate increase, in the process rejecting an administration recommendation on dealing with the unbudgeted income.
The draft property tax bylaw presented to council by administration called for some of the additional revenue above the original budgeted estimates to be used to reduce the tax rate increase. The remainder would be added to the town’s capital reserve.
The recommendation was that about $67,000, 61% of the assessment income increase, be used for to lower the tax rate, while $42,000, 39%, would go to reserves.
That reflected the fact that the increase is due both to real growth in residential properties, 39%, and inflationary value growth in residential and commercial properties, 61%.
In addition to this recommended path, administration presented council with two alternatives.
Alternative one was to reduce the overall tax levy by the total amount of the additional revenue generated through assessment growth, with no funds going into capital reserves.
The other alternative was no reduction in the tax increase set out in the 2024 budget, 5.25%, with all of the additional revenue devoted to the capital reserves.
After first reading of the budget was passed, council opted for the first alternative.
Councillor Ray White moved that council reduce the overall tax by the total amount of additional revenue generated through assessment growth.
White said that in the case of a lower-than-expected assessment, taxpayers would be asked to pay more, so they should benefit from the increase.
Support for that alternative was also expressed by Councillor Stephen Dafoe.
Dafoe remarked that while the recent budget anticipated putting more funds into reserves than in past years, the $42,000 differential was not that significant.
“We have asked for a lot of funding from the residents over time,” said Mayor Simon Boersma. “It’s not easy out there. If we can bring some money back into the pockets of our residents that is good.”
The motion passed unanimously.
The property tax bylaw, amended to reflect council’s decision, will receive second and third reading in April.
Once passed, it will reduce the 2024 property tax rate increase to 4.45%.
The average home, valued at $350,000, will see an annual tax increase of $128.40, or $10.70 monthly. For the average business, with a $650,000 value, there will be a jump of $1,282.32, or $106.86 a month.
The administration bylaw presentation report warns that choosing alternative one, and not contributing to capital reserves, eliminates investment revenue potential as well as the possibility of reducing future tax rate increases.
I think you need to confirm your interpretation that property taxes will go down because assessment is higher than anticipated. The tax rate will drop because a lower tax rate is needed to generate that same funds to the town from the higher assessment – but the net impact on a taxpayer doesn’t change. Both the assessment and the tax rate impact the dollar amount paid so decreasing one multiplier to offset an increase in the other doesn’t create an actual decrease in the taxes paid by a property owner.
Council has the option of decreasing the tax rate (and taxes paid) considerably due to the $2.3 million unbudgeted surplus forecast to result from 2023 operations (recorded in the budget documents as $2.7 million going into reserves instead of the 2023 budgeted $400,000 going into reserves. (Email the town administration to confirm the figures and the impact on your property).
Sincerely, Ed Cowley