cgallant@medicinehatnews.com@CollinGallant
An increase to Medicine Hat and Cypress County’s share of the provincial education tax is among the highest in the province likely because of a construction boom two years ago, according to government officials.
The relative stability of the local property market in an otherwise volatile Alberta may also be why local property owners’ share of the provincial education requisition will grow by 8 per cent this year – the highest of any city – while the pan provincial increase is half that.
Last week’s provincial budget outlined that the portion of the province’s education budget that’s funded from collection of local taxes will increase by $102 million this year, to a total of $2.6 billion.
On Saturday, the News revealed that nearly 2 per cent of the increase, $1.9 million, with be charged to Medicine Hat property owners, who only make up about 1 per cent of the population.
Mayor Ted Clugston hypothesized such an explanation following Monday night’s council meeting, that Medicine Hat benefited by a decreasing share while other cities boomed, and now the reverse was happening.
“We saw the reverse when Calgary was booming, and we had less of an increase in Medicine Hat, so what comes around goes around, but it’s difficult having to collect it,” said Clugston.
Officials with Municipal Affairs also said the most obvious explanation is that while the total requisition is charged against the assessment base across the province, Medicine Hat’s share of the assessment base is growing faster, and remaining at or above falling property values elsewhere.
The ministry says the raise equates to population increase plus inflation, but since assessment is factored in, not all municipalities are affected equally.
In Medicine Hat’s case the education requisition rose by 8 per cent for city property owners, and Cypress County tax accounts will need to raise 10 per cent more.
Figures show that the requisition amount showed relatively no increase for residential property accounts in 2019, and only a 3 per cent increase for business accounts.
Overall, the amount of money collected from Medicine Hat taxpayers for education portion has risen by about $4.3 million since 2014 to sit at $25.3 million this year. That is a 20 per cent increase over seven years – but almost half relates to this year’s increase.
When a municipality’s amount increases out of step with the rest of the province, it’s typically because its assessment base grew relative to others. That doesn’t necessarily mean a local increase in population or land values, officials noted, but could mean they remained stable while others fell back.
Most municipalities will see their amounts increase, but the commercial assessment class in Calgary will see a seven per cent reduction.
Property tax collection is generally hard to understand as rates are adjusted against ever-changing property values to come to a specific amount, called the requisition.
Local officials also incorporate assessment growth, meaning newly built properties or general changes in home prices.
In the province’s case for the education requisition, it sets the tax rate for the entire province in one year using the previous year’s assessment figures.
Amounts per municipalities are forwarded to local budget planners and they add relevant rates to local tax bills, then forward the proceeds to the province.
Clugston said taxpayers who blame the city for high tax bills should realize that about two-thirds of the revenue is for municipal purposes.
“They’re increasing the requisition across the entire province and that’s a really easy thing for the provincial government to do because we have to collect it,” he said.
“No matter how many times you tell people that you’re collecting on behalf of the province, people look at their tax bills … and blame city council.”
The City of Medicine Hat has already outlined a municipal tax increase of about 3.5 per cent this year, in part to help diminish the city budget’s reliance on reserve funds since natural gas dividends ended in 2014.
