Taxation: Setting the Mill Rate

Step one was the assessment; figuring out how much the entire municipality is worth (the Overall or Total Assessment). 

Step two is building a budget to determine how much the municipality needs to operate for one year.

Step three is setting a mill rate.  Setting the mill rate is really very simple.  All you have to do, is divide what you need into the overall (or total) assessment.  The mill rate is the number of dollars the property owner must pay, per thousand dollars of his property's value, as declared on the assessment.  For example; if a home's assessed value is $200,000 and the mill rate is set at 6.5 mills, the homeowner must pay 200 X 6.5 = $1300 in property tax.

Oops, not so fast!  The provincial government shoves its hand in there, too!  The Ministry of Education tells each municipality how much it will take to pay for education services in the area.  They don't ask, they don't advise, they just tell and take!  Alberta Education simply dips into each municipality's bank account a couple of times a year, and snatches out tens of thousands of dollars each time. 

If a municipality is having difficulty collecting its taxes, this makes the operation of that municipality even harder!  The province takes those funds out - whether or not the municipality has been able to collect them!   If some taxpayers are unable (or unwilling) to pay their taxes, the municipality suffers because it still must make sure it has the money in bank to pay the TOTAL bill for the provincial education portion of the property tax -- even though some of those dollars haven't been collected yet!

When you receive your tax notice, check down to see how much of that is going to the province.  It will be listed there as a mill rate for education.  This is added onto the municipality's mill rate. 

Taxation: Municipal Budgeting

Step two in the taxation process is building a budget. 

Each municipality must go over their spending in each and every department during the previous year, then decide how much money that municipality will need to operate for the upcoming year.  The budgeting process begins in the fall of each year.

Most larger municipalities finalize their budgets close to the beginning of the calendar year, but many smaller ones finalize theirs in late spring.  For those who wait until spring, they must create and authorize an "Interim Budget," which is basically just an extension of last year's budget.

Provincial law mandates that municipalities must not operate with a deficit budget - so councils and administration staff  must work hard to "balance the budget" each year before in can be approved.

Smaller communities like ours must run a very tight ship.  We must provide our citizens with everything a larger municipality does, but with far fewer people to "pay the bills!"   Citizens of Beiseker still require streets and sidewalks, street lights, water & sewer services, playgrounds, recreation & cultural facilities, and fire protection, along with a host of other services -- but our tax base is much smaller than a city!

For example, an arena in a city must serve (and be paid for by) at least 20,000 taxpayers.  A small town arena may only serve fewer than 2000 people.  Yet both buildings must be built, maintained, and operated in a similar manner.  Beiseker is very fortunate that our Ag Society has taken on the task of managing our arena, here!

After the budget has been created and approved by the elected council, it's time to set the mill rate.

Taxation: Market Value Assessment

Here's my first of a series of blogs on municipal taxation.  I am writing these to address a concern by a citizen at last Monday's Town Hall Meeting.

The biggest source of income for all municipalities in Alberta is property taxation.  Every year, each municipality goes through a complicated procedure to figure out how much each property holder in that municipality will pay in property taxes.  Here are the steps;

Assessment:  First, the municipality must establish how much each property is worth so it may be taxed accordingly.  A few years ago, the Alberta provincial government insisted that the municipalities go to a system called "Market Value Assessment" aka MVA.  That means that each property would be assessed based on what the owner might get, if he were to sell it on the market today.

That works in larger municipalities, where many properties are bought and sold each year - but for small communities like ours, assessors must rely on a formula based on the selling price of similar properties in other similarly sized communities.  I think this system is seriously flawed --because finding a municipality exactly like ours is next to impossible.

Another problem with the MVA is the hardship it creates with seniors on a fixed income.  In Calgary, middle-class homes purchased in the 1950s and 1960s are now considered "inner city," and are assessed at millions of dollars!  Their assessments are so high, that those seniors who bought those homes 50 years ago can't afford the $500/month in property taxes.  They are priced out of their own homes and forced to move!

Larger municipalities can afford to have a "tax department," which can assess properties and handle any appeals.  Smaller communities like Beiseker have to hire an assessment company to do our assessments.

Every property owner will receive a assessment notice, usually in the spring of each year.  Property owners can appeal their assessment -- although there is a fee to do that. Property owners cannot appeal their taxes, only their assessments.

After all the assessments are completed, the assessors send the municipality a Total Assessment figure.  That represents what they think the total worth of the municipality.

Stay tuned tomorrow to find out how the municipality uses that figure to decide how much you pay in property taxes.

Excellent Turnout at our Spring Town Hall Meeting!

I was very impressed with the number of citizens who came out to our Spring Town Hall Meeting!  It was good to see!  After a short regular meeting of Council we opened the floor for questions from those assembled.  Topics addressed included streets, frost boils, the Bassano Station, storm water drainage, taxes, illegally parked vehicles, cluttered laneways, sidewalk construction, and house numbers.  I think we on council answered the questions fairly and accurately. 

One ratepayer had a question about mill-rates, assessments,  and taxes.  I realized that he might not be alone in his misunderstanding of that relationship.  We will try to clarify that issue before our tax notices come out, later this spring.

I was impressed by the numbers of citizens who came to Beiseker's defense when one citizen told us that our village was a terrible place to live.  Us five councilors and our village staff members  were moved by those positive comments that followed, and the applause they generated.  I think now we'll work harder to make our village an even better place to live.

I'm looking into some of the other inquiries made last night, and I will try to provide answers to you here, on Facebook, or in the Mainline Express newsletter.

Thank you all for coming!

Questions for the Candidates: Health, Education and Social Services

This last question is about 'HESS.'  In my view, every time our provincial government wants to tighten the belt, they start by reducing funding to Health, Education and Social Services!  Funding for these three areas is hard enough as it is, but tougher times make it almost impossible.

• Plans for new or upgraded health facilities are put on hold or dropped completely.
• Funds to school divisions are frozen or reduced even though student populations are ever-increasing.
• Health workers, social workers and teachers are asked to accept reduced or frozen salaries even though their jobs are becoming more difficult.
• Funding for new neighborhood school construction is years (sometimes decades!) behind the identified need for the facility. 

Question #5:  If your party forms Alberta's next government, how will it maintain needed funding to Health, Education, and Social Services while addressing these tough economic times?

Questions for the Candidates: Heritage Savings Trust Fund

Back more than forty years ago, then-new Progressive Conservative Premier Peter Lougheed created the Alberta Heritage Savings Trust Fund.

The fund was designed to be an investment in Alberta's future, and make funds available for those "rainy days" which occasionally strike this province.  I fully supported this fund, but I've never heard a definition of what would qualify as a "rainy day!"  By my calculation, we've had a couple of "rainy days" over the past few years yet I don't believe  the Fund was used to help any Albertans though those rough times.

We've heard the Prentice PCs talk about strengthening the Heritage Trust Fund, but I'd like to know what the other parties would do.

Question #4;  If your party forms Alberta's next government, what are you going to do with our Heritage Trust Fund and who and how will decide how it is spent,and by what criteria? 

Questions for the Candidates: Economic Diversification & Foreign Ownership

Question #3 addresses economic diversification.  This tends to be something I believe is important.

All parties in Alberta have paid lip service to the idea that our economy must move away from its dependence on petroleum.  But I have yet to hear of anything concrete.

I also fear that any attempt to develop other sources of revenue in our province, especially those exploiting natural resources, will end up in the same hopeless mess that petroleum is in now.

Even though Alberta's gas and oil reserves are found beneath our feet, we have little or no control over its exploitation and distribution. I see most of our petroleum industry owned and controlled by foreign interests.  The price Albertans pay for gasoline processed from our Alberta oil is seemingly decided by folks in Houston, Denver, and Beijing -- not Calgary.

Oil companies take home some huge profits from our oil and gas reserves, higher than almost everywhere else in the world!  What's to prevent any new industries, created to diversify our economy, from going the same way?

Question #3;  If your party forms Alberta's next government, how will you ensure that your efforts to diversify our economy will not turn into another foreign ownership fiasco like the petroleum industry?