Coun. Andy McGrogan gestures at Tuesday's city council meeting as Mayor Linnsie Clark looks on.--News Photo Collin Gallant
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Medicine Hat will dip further into its bank account to keep a tax increase to the approved 5.6 per cent after growth in the assessment base – estimated to be zero last year – actually shows a net negative.
That’s due to high-profile tax changes for the Aurora Greenhouse, which becomes a non-taxable farm building this year, as well as provincial changes to exempt affordable housing.
Setting the tax rates Tuesday, council approved using an additional $520,000 from its reserves to back up the difference, rather than adding to an increase.
“We were aware of changes in 2024 and had forecast zero growth,” said finance director Lola Barta. “But the losses ended up being higher than what we expected.
“Due to a few large adjustments … municipal tax (portion) would have to increase to 6.2 per cent to collect the same $94 million … To keep rates the same, the shortfall would have to be recovered from reserves,” said Barta.
Five options presented would adjust tax ratio between classes, and other factors, but council approved keeping the increase the same in all classes.
“It’s a badness thermometer, there are no good options,” said Coun. Andy McGrogan, who said the reserve option was “the best of the options available.”
The city budget already includes $11.8 million in direct reserve withdrawals, and $5 million in recurring income from an endowment reserve.
That’s aside from a $94-million tax requisition that equates to a 5.6 per cent tax increase this year.
That works out to an additional $124 per year for the median detached home, $435 for the median multi-family housing facility and $908 for a business property worth $1 million.
As well, the provincially set education requisition for Medicine Hat will also grow by about $3.1 million this year, adding 11.7 per cent to last year’s amount, while the smaller Cypressview housing levy was slightly lower.
“(An increase of) 5.6 per cent is high, but the province is changing some regulations,” said Mayor Linnsie Clark. “It seems that it’s a real possibility that we could cut $520,000 from the budget. I’d like to see where else that could come from.”
Clark was told the city budget also requires administrators to seek out $2 million in cost savings for the 2026 tax year with a workforce evaluation.
“It allows us to balance our budget while we’re looking at that,” said corporate services managing director Jilian Campbell.
During last year’s budget, finance officials flagged the potential that net-assessment growth may stall in 2025 as the Bevo Farms Greenhouse facility (formerly Aurora Cannabis) was reworked to accommodate traditional greenhouse production. It was set to be reclassified as a non-taxable farm building.
A final report on assessment growth stated the loss of taxable value was larger than expected to the non-residential property tax class, and resulted in a net loss of half a percentage point.
The provincial budget also reduces the amount of taxable income from certain affordable housing properties. That led to a 0.19 per cent reduction.
Combined, and measured against organic growth elsewhere, assessment growth was $3 million less, or about negative 0.03 per cent. Assessment value rose for existing properties by about 4 per cent, or $400 million, due to market conditions.
The tax bylaw readjusts rates against assessment to collect only the amount in the 2025 budget, which is $94 million, or 5.6 per cent higher than 2024.
The city however, can distribute tax share across the property classes, and since multi-family and non-residential classes saw reduced assessments, the remaining base would pay more to maintain the distribution.
Rather than adjust ratios, staff suggested using $520,000 in additional reserve funds to keep the municipal increase for all classes at 5.6 per cent.
That would result in a median assessment of single-family home worth $334,400 receiving a tax bill of $3,235, including $2,309 for municipal, $886 for education (up 10.3 per cent) and a slightly smaller Cypressview housing levy of $40.
Multi-family properties worth $1.06 million, would pay $11,110, including municipal $8,189, education $2,795 (up 12.1 per cent) and $126 for Cypressview.
A median business valued at $1.05 million would pay $21,440, including $17,543 municipal, education $4,237 (up 17.3 per cent) and Cypressview $125.
