After lengthy discussion between town council and administration, a final decision on the 2019 unanticipated property tax revenue due to reassessments has been set for the next regular meeting of council.
Administration recommended the total of approximately $510,870 be put into the operational reserve and be brought forward in the 2020 town budget, which would reduce the amount of tax needed in 2020.
The unanticipated revenue was collected due to the large number of property tax reassessments that took place in 2018 coupled with an overall increase in assessment values of approximately four per cent.
The original budgeted tax revenue for 2019 is $13,198,722.
“Just to be clear, there is always unanticipated property tax revenue that happens every year. We never estimate the exact amount, we try to guess in ranges of $50,000 to $60,000 and put that in the budget,” said Carla Fox, director of corporate services.
Coun. Ryan Maguhn voiced concern over carrying forward the $510,870 into subsequent budgets which would add up to one million dollars in tax revenue over two years.
He added that the money should be divided among taxpayers and given back.
Fox clarified that putting the money into reserves and bringing it forward into the revenues for 2020 would not change the bottom line from what was originally passed in 2019. The $510,870 collected this year would not be collected again going forward.
“It would reduce all the mill rates and give everybody a reduction in the tax required to maintain that budget as anticipated,” she said.
She added that giving money back to taxpayers isn’t a simple solution because the money was collected from people who hadn’t been paying at the correct assessed market value for up to five years. The perspective could be that other residents were subsidizing taxation for the people who weren’t reassessed in those years, she explained.
Coun. Albert Ostashek said he felt the most fair way to treat this unanticipated revenue would be to give it back, but he did not agree with an across-the-board refund to every rate payer.
“There were changes in assessments where people’s assessed property values actually went down,” he said.
Fox said that figuring out which taxpayers were most affected by the property value reassessments would take a lot of time.
“The appeals are there to determine whether the reassessments were fair or not. If the assessments are fair, then the best way to treat the refund is to reduce the mill rate across the board,” she said.
If the reassessments are legitimate, the tax rate would be reduced for all residents, she added.
There are several appeals still in progress, which means the exact amount of unanticipated revenue is not yet known.
Coun. Dewly Nelson stated that he would like the money to be placed in a dedicated reserve to start 2020 as a normal year without an extra taxation already in the operating budget.
When the 2020 budget discussions begin, numbers will be based on the 2019 budget passed by council and not the extra revenue collected, administration clarified.
Ostashek pointed out that using the $510,870 surplus to offset the tax increase in 2020 would lower the mill rate. That would lead to a jump up in 2021 when there is no extra money available.
To avoid the fluctuating mill rate, Ostashek stated that putting the money in a reserve would be the best option.
Mayor Marcel Michaels brought up the idea of putting a policy in place to ensure this situation won’t occur again in the future.
Property Tax Assessments are calculated annually, using a “market value standard,” according to the Municipal Government Act (MGA). An assessment is divided by its sales price, which creates an assessment to sales ratio and can be applied to other, similar properties.
Home sales of like homes help re-adjust assessments to keep them accurate to actual value on the market. Property assessment values from 2018 were used to calculate the anticipated property taxation revenue for this year.