Council OKs 2020 tax aid
As part of city’s COVID relief plans, what was once a planned increase to property taxes will now work out to small decrease
Extra cash from city reserve funds and a provincial decision to revert to 2019 Alberta education levy rates will turn an expected property tax hike in the Hat into a minor decrease, city council approved on Monday.
That signals a temporary pause on the 10-year Financially Fit plan that aims to balance the budget in the absence of gas division dividends.
Council members reiterated they expect to continue containing costs while growing the tax base to lessen general tax increases and make up what was originally a 20 per cent budget gap.
Several argued that the 2020 tax rate shows council is committed to aiding citizens, while addressing the longer-term budget challenges, but that will be more difficult due to the pandemic response.
“There was an immense amount of work by this council and a lot of collaboration to have a 3 per cent decrease … you’d be hard pressed to find a municipality that’s done that.” said Mayor Ted Clugston, adding that a poor economic outlook and provincial government cutbacks could mount next year.
“Next year will be tough. Our revenue is going down and some of these bills will have to be paid in 2021. We have found (budget savings) that could be announced soon.”
This year, the owner of the median single-family home, valued at $266,900, will pay about $77 less, or three per cent, compared to 2019. A $102 increase, or 3.5 per cent, was originally projected.
A business property valued at $1 million would see a $96 reduction — compared to a $594 increase — when all factors are considered, including the province’s decision in May to not apply a major adjustment to education portion.
“The average taxpayer will see a decrease in 2020,” said Lola Barton, the general manager of the city’s finance department during a presentation on Monday.
Last month, council approved an additional $3.9 million in reserve funds be used to make up the difference between last year’s and this year’s $82.3-million tax requirement that was to be paid for through increases.
The provincially-set education levy also remains the same as 2019 in a stated effort to help those struggling with financial fallout and job losses from the pandemic. That adjustment would have seen rates in Medicine Hat increase the most of any major centre in Alberta.
Similarly, city council approved extra reserve cash be used to avoid an increase, which will be applied to bills as a “cancelled” amount this year, but will be part of the 2021 calculations.
Coun. Phil Turnbull said the city will still use $15 million in reserve funds — aside from the 2020 COVID payment — to balance the budget this year without a natural gas dividend Financially Fit calls for stepped increases each year in the four per cent range and cost cuts to shrink the structural deficit each year.
“If we don’t get a means of getting that under control, we’ll wake up one day and find we don’t have any reserves, and suddenly cost and revenue becomes a real devil,” said Turnbull.
“We’re working hard to find efficiencies in our city and working hard to build the tax base.”
Coun. Darren Hirsch said that attempts to boost tax revenue through new private-sector construction and business activity and population growth are important.
“We have the commitment on council to look at expenses,” he said. “I like the pace we’re on. I’m happy to see that we’re on that trend, but it has to be affordable for everyone.”
Coun. Kris Samraj was the lone vote against the mill-rate bylaw stating it doesn’t address what he called the “intentionality” of rebalancing property tax rates to the level of city services used by specific property classes, specifically multi-family residential.
Taxes are due on June 30 each year, but this year the city will waive penalty fees for non payment until the end of September.
While there is no difference across the entire property-type class, individual tax bills will vary on the basis of the assessment change.
And, the tax increase will be applied, but the difference related to rate cancelled by the use of the reserve funds.
Residential class for example, will see the combined rate rise by 2.7 per cent, but with the cancellation, the entire class will pay a combined, 1.3 per cent less than last year.
Similarly, the non-residential class will see a paper increase of 2.6 per cent, but an eventual 0.5 per cent reduction across the entire class. The relatively smaller multi-family housing and farmland will also see between a 0.4 and 1.1 per cent reduction.