Tax surplus to offset 2020 taxation

Masha Scheele

Council approved to place the 2019 unanticipated property taxation, due to reassessments, into the operational reserve in 2019 and bring this reserve amount forward into the 2020 Town revenues to offset the amount of taxation required.

Approximately $510,870 of unanticipated tax 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 fact of the matter in this situation is that we have more funds than we anticipated, in terms of transparency and openness, I think the best thing to do is to apply those funds to the future tax rate because it ensures that the spirit in which those funds were taken and collected from the citizens go back into the area they were taken from,” explained Coun. Ryan Maguhn during the regular council meeting on Sept. 17.

Coun. Albert Ostashek expressed his concern that by utilizing the anticipated tax surplus to offset taxes in the next budget cycle, it will drop the mill rate for all citizens resulting in everybody paying less tax and followed by a jump back up in the mill rate and taxes.

“It needs to be made crystal clear and obvious to all ratepayers that all things being equal in 2021 we will still need to collect [the budgeted] dollars, but that $500,000 is not going to be there,” he said.

Council voted against a motion made by Coun. Dewly Nelson to place the money into the recreation centre construction reserve, as well as his motion to direct administration to bring back a 2020 budget recommendation through the budget process requiring a maximum taxation of $13,100,000, which is equivalent to the 2019 budget plus four per cent.

“In 2020 we will have additional assessment revenue from 2020. In order to honour our motion, and we actually want to collect taxation, this gives administration an extra half million dollars from the approved budget in 2019, which represents about four per cent,” explained Coun. Dewly Nelson. “If we achieve a zero per cent increase, it is actually an eight per cent increase in taxation. That is my fear, zero per cent does not honour our motion of offsetting tax as we have to take that extra half million into consideration.”

Ostashek added that a four per cent taxation increase is not an unreasonable target for council to recommend to administration. 

Both Coun. Tyler Waugh and Coun. Ryan Maguhn mentioned that more information and time would be needed before they’d be comfortable requesting a maximum taxation for the upcoming budget.

At the standing committee meeting on Sept. 10, council briefly discussed how the unanticipated tax surplus could have been avoided.

Waugh stated if assessment impacts were brought to council prior to passing the tax rate bylaw, the rate could have been adjusted accordingly and still collected the agreed upon tax within the 2019 budget.

“There were different moving factors, the length of our budget process, when we got the information from the assessor, when we got the information from the province, it wasn’t as smooth as it should have been,” said CAO Martin Taylor.

Waugh added in years past, options to reduce the tax rate or to put money in reserves were presented, while this year it has happened retroactively. 

He went on to ask when administration learned about the assessment impacts.

Fox explained that the assessments were completed in March, and the budget was adopted on March 4.

The impacts of assessments were determined and discussed with the CAO in early April, while the tax rate bylaw was passed on May 7.

“A couple things that came into play there is that budgeting went on three months longer and you had a new CAO and the impact of those things bringing that information forward,” said Fox.

Fox explained that going forward the impacts of assessments will be brought to council once they are known.

“In summary this information was known and a decision was made,” she added. Fox clarified that as director of corporate services, she cannot bring anything to council without authorization from the CAO. “I will do whatever I am allowed to do, through the approval of my CAO,” she said.