Council pushes passing of tax rate to May 1

By Medicine Hat News on April 18, 2023.

City council will debate – and be legally required to pass – final property tax rates at its May 1 meeting after holding off a vote on five scenarios to either shift or maintain the relative tax burden of residential and business property owners on Monday night.

The recommended rates from administration would see the ratio paid by each class remain relatively stable, but each was affected in opposite fashion by both market value and new construction.

Councillors refused to move the proposed rate forward, stating they needed time to evaluate whether the ratio paid by each should tighten in order to reward growth in the commercial sector.

“It’s important for us to sew this together and understand the impact,” said Coun. Darren Hirsch after a 45-minute presentation on five options on Monday.

“I’m probably not going to support it (the recommended option).

“We talk about supporting our small businesses, and for the sake of $10 (per year) on to residential, we could support them with a $287 reduction (in another proposal).”

The 2022-23 city budget had called for a 5 per cent tax increase, but with a forecast of 1 per cent assessment growth on new accounts, which would offset the bump for existing taxpayers.

The finalized tax roll however, shows growth arrived at 2.1 per cent, but mostly in non-residential class.

“Comparing what actually happened, the assessment was higher by 1.1 per cent (over forecast),” said director of finance Lola Barta.

“Typically we budget for 0.5 per cent (in physical growth), but in 2023 we adjusted that (up) to 1 per cent.”

Assessment each year is affected by market changes in property values, but also the addition of value due to new building construction, sometimes called market growth.

But since growth occurs and is a factor only in its own property class, rates are often adjusted to keep the relative share of the tax burden equal.

Out of five scenarios presented for council’s consideration, the recommended option would see the median residential home, assessed at $306,400, pay $2,045 this year, about $74 more than 2022, including an $11 reduction in education tax assessment, which is set by the province, and $9 more from the Cypress View Foundation Levy.

For non residential properties, a 0.4 per cent rate increase would see an extra $86 per $1 million in assessed value.

It would lower mill rates for residential by 2 per cent to offset assessed growth of six per cent for an overall change of 4 per cent.

For non-residential, increasing the mill rate by 2 per cent against a market change of 2 per cent, also brings taxes 4 per cent higher.

“It shifts the tax burden to all classes, no one is really benefiting,” said Barta, who said an addition $500,000 in actual revenue would remove the same amount in reserve spending the city is using to balance the budget.

Mayor Linnsie Clark, Couns. Andy McGrogan, Shila Sharps and Allison Knodel also said they would need more time to study changes.

“We’ll bring it back on May 1 with council having enough information on a different bylaw,” said city manager Ann Mitchell.