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Homeowners should expect small tax increase

Despite a 7.57 per cent average decline in residential assessment values, most Town of Westlock home owners will face a small tax increase this year.

Despite a 7.57 per cent average decline in residential assessment values, most Town of Westlock home owners will face a small tax increase this year.

Town councillors discussed the municipality’s 2019 mill rate at their April 15 committee of the whole meeting and while they didn’t pass the mill rate bylaw, they did vote 6-0 to have administration present it at council’s regular April 23 meeting — Coun. Clem Fagnan was absent.

In December the town passed its 2019 operating ($2,575,670) and capital ($8,089,895) budgets — the operating budget featured a 2.8 per cent increase over 2018.

“I think overall it shows that we’ve done an awfully good job of budgeting. When we started the process we were looking at a five per cent increase to stay status quo … and I just couldn’t do that, people can’t afford that kind of an increase this year, so it’s a relief not to have to go there,” said mayor Ralph Leriger.

“Quite frankly I don’t think it’s nearly as painful as I thought it was going to be.

“When we went into our discussions originally thinking that it was going to take a five per cent increase to see the same service levels given the carbon tax and everything else … we’ve done some good digging.”

Council appears set on increasing the residential mill rate from 8.9063 to 9.8651. Simply, the assessed value of a property is multiplied by the mill rate, then divided by 1,000 to calculate the tax bill.

“We’re going to obviously hear, ‘My assessed value went down and my taxes went up, what the hell is going on?’ … we’re going hear a lot of that. But that’s why we sit here,” said Coun. John Shoemaker, who’s an accountant by trade.

Added Leriger: “When we can point to our entire financial picture and tell the whole story of our debt down, reserves up, projects done … all that stuff and closing the tax gap with our contemporaries I think it tells a very compelling story.

“But we’re going to tell it over and over again, you’re right about that.”

Residential properties have declined in value by just under $30 million — all residential properties were valued at $399,373,970 in 2018 versus $371,363,830 in 2019. The town collected $3,554,616 from those properties in 2018 and expects to reap $3,660,914 in 2019.

Requisitions from Homeland Housing and Alberta Education, which the town collects, but passes on to those two, is expected at $1,237,050.12.

“I looked at mine and it’s an older place, but my assessment dropped by eight per cent and my taxes will rise by $32,” said Leriger. “So, divide that by 12 and that’s not quite $3 a month.”

The average assessment example provided to council showed that a home valued at $276,330 in 2018 would have paid $3,316 in taxes, including the senior and education requisitions. Using an average decrease of 7.19 per cent, the home will be worth $256,461 in 2019 and the owner will face a total bill of $3,384 — an increase of $69, or 2.07 per cent.

“(I) just picked a large group of houses that exist in Westlock around that number. It’s pretty random, but it gets the point across,” said town finance director Julia Seppola, noting that 85 per cent of the residential properties dropped from one to 10 per cent.

Seppola also provided examples using a $250,000 home with a 10 per cent drop and 10 per cent increase in assessment, although she noted there were no properties that gained 10 per cent. Notably, a home that experienced a 10 per cent drop will pay $31 less in taxes.

On the industrial/commercial side, business owners should also expect a small mill rate increase, from 16.1571 to 16.9437, while the category “improved commercial annexed area” remains at 29.3193.

As with residential, commercial/industrial properties dropped in value, from $165,995,720 to $160,061,640 in 2019. For this coming year the town expects to generate $2,719,613, which is slightly above the $2,689,199 collected in 2018.

The sample provided for a commercial/industrial property used a 2.05 assessment decrease. In 2018 a $500,000 property would have paid $10,178, including the school and seniors requisitions, while in 2019, that same property would be valued at $489,750 and face an all-in bill of $10,371, an increase of 1.89 per cent.

“We’re still quite a ways under the two-times residential, which I like to see, but we’re looking at a .8 of a mill increase,” said Leriger. “Another goal of ours is not to go more than double from residential to non-residential in mill rates knowing that once you’re more than two times it’s much more difficult to attract businesses and do real economic development.”

Surplus discussion

There was no appetite from council to use a $548,840 surplus from 2018 to drive down the mill rate.

“I don’t really want us to use a surplus to reduce taxes. I just think we’d be shooting ourselves in the foot next year and the year after as we’d have to make up the decrease by increasing the mill rate,” said Shoemaker. “I think we should stick with our budget and we have to go with a higher mill rate.”

Leriger pointed out that $496,000 of the surplus were one-time grants, or cost savings, although he was happy to see a $135,000 recreation surplus due to more effective scheduling and vacancies.

“There’s a $50,000 grant from FCM, that’s a one-time thing. There was a delay in hiring the one position for the RCMP, so there was $85,000 there. That position is now filled and you don’t get that saving next year,” said Leriger.

Added Coun. David Truckey: “At the end of the day using a surplus to offset a tax increase is a very slippery slope. It’s a dangerous slope, especially when much of this is one time.”

Leriger said administration will bring back recommendations on how to use the surplus, adding that using it on a capital project would mean the town wouldn’t have to borrow as much.

“We’ve put a little less into reserves the last few years so we could put some there, or you can use it for infrastructure/capital projects and then you don’t have to borrow as much and then aren’t paying as much on debt.”

How does Westlock compare?

The mill rate package also included charts comparing Westlock’s tax totals to 23 other communities — the town used a 10-year-old, 1,200-square-foot home as the baseline.

According to those figures, a home in Westlock in 2012 paid $3,123.34 in taxes which is on par with Athabasca and Barrhead, which had totals of $3,102.91 and $3,145.42, respectively. The script flips as Westlock’s figure was $2,996 in 2018 versus $3,371.53 in Barrhead — Athabasca didn’t provide a 2018 figure, but in 2017 the tax total was $3,139.32.

“We’re moving back towards the centre again and I would suggest that a direct reflection of our policing costs,” said Leriger while looking at the 2018 graph.

“There are different anomalies from these communities, but you have to compare with someone and these are the ones willing to give up their data.

“It costs similarly to operate a municipality from community to community — it costs the same to buy a grader, or pay your staff.

“But the start of the equation is your assessment. And if your assessment is lower you need a higher mill rate which gets you the dollars you need to operate. So comparing mill rate to mill rate isn’t always as meaningful as one might think.”

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