Taxation: Tax Collection

Once the mill rate has been set, the municipality can now prepare and send out its tax notices. 

There is a deadline the municipality must follow in sending out these notices, and a deadline by which those taxes must be paid.  When you receive your tax notice, check carefully to make sure you know what the last possible day is to pay your property taxes. 

Traditionally, municipalities charge huge penalty fees for late paid taxes to encourage folks to pay on time.  This is because the municipality must have the money in the bank when the province comes calling to grab their Education Portion! 

Most municipalities in Alberta have two methods of paying property taxes.  Method One is simply a lump sum payment on or before the tax due date. 

Method Two is much easier in my opinion.  It involves paying monthly instalments throughout the year.  We've been on Method Two for a few years now and it's great!  If you think this might work for you, contact the Beiseker Village Office (403-947-3774) and get the details from them.

If property taxes are unpaid, the municipality has a long and involved procedure to collect them.  The property owner can come into the municipal office and work out a payment plan to cover the amount owing, plus the penalties. 

The municipality also has the right to take the property and sell it to recover those unpaid taxes.  There is a time frame which must be followed.  I believe it's three years.  If the property is seized and sold, the municipality will subtract the amount owing on back taxes with penalties - and then place the remainder of the selling price in the bank. The former owner can apply to have this remainder returned to him.

Municipal Taxation (aka Property Tax) is an important part of keeping our municipalities operating smoothly.  I haven't met one person in my life who looks forward to paying their property taxes!   But almost everyone I meet understands why these taxes are so important to a municipality. 

I hope this series has helped you understand how Municipal Taxation works and why it is so important.

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!

Village Financial Audit

I noted an article in the most recent Rocky View Weekly reporting on our village's financial audit for 2012.  I want to commend Beiseker's village council and the village's staff for managing our village so well this last year. 

The village of  Beiseker has a cash flow problem caused by two things;

•  We still have a huge amount of back taxes owing!   Unpaid taxes have a huge impact on a small village like ours!  The tens of thousands of dollars owing could improve many things in the village, if it were available to us. It is very frustrating to have unpaved streets, broken sidewalks, and other issues within the village - and not having the funds available to address them!
•  The second problem actually comes from the provincial government.  As I've mentioned before, we collect the education portion of the property tax on their behalf.   They in turn withdraw this money from our bank account.  And therein lies the problem.   The province  withdraws the total amount, regardless of how much is still owing to the village by rate payers or has not been collected, yet.  We have no imput - They just take it!

Overall I was very pleased with the results of our 2012 audit.  If we can stay on this road of fiscal responsibility, our village will continue to do well - in spite of two problems I've mentioned.

The Provincial Budget

A little over a week ago the provincial government came down with its new budget.

Premier Alison Redford had assured us that she would not be downloading any financial difficulties to the municipalities. I have examined the budget quite carefully, and I participated in a conference call with Municipal Affairs Minister Doug Griffiths and Transportation Minister Ric McIver the day after the budget was brought down. I disagree!

Here are some of my concerns regarding this budget and how it affects our little municipality.

• STEP (or, Summer Temporary Employment Program) was a grant so that we may hire students to work for the village over the summer.  It's been scrapped! This means that if the village wishes to hire students this summer, it will have to come up with the money itself.
• The Municipal Sustainability Initiative grants are continuing at their existing rate for this year, however the future of that program is in jeopardy. We used this program to upgrade the first block of our Main Street.  We were hoping that this program would continue so we may be able to upgrade the remainder of Main Street.
• I was unable to ascertain the future of the Seniors' Property Tax Assistance Program.  It will exist for 2013 but after that it's anyone's guess.  The program gave some tax relief to some seniors who have been caught by MVA (Market Value Assessment) and are, in my opinion, paying far more in property taxes than they should be.  Municipal Affairs Minister Doug Griffiths' office said they would find out what was happening here and get back to me. 
• Transportation Minister Ric McIver told us that almost all smaller projects have been put on indefinite hold.  Beiseker relies on those smaller projects!  But I hope the agreed changes to Highway 72 (North Road) will still go ahead this spring!
• The Water For Life program has been drastically reduced, but I understand the province will continue to fund accepted projects at the 90% level.  You will recall that Beiseker's regional water system (called Aqua 7 Regional Water Service Commission) was originally funded about 40% by the province.  Looks like there's not much money to help us out, there!
• There was no relief mentioned for small municipalities who have to pay their Education Portion of the property taxes in full to the provincial government -- even though they haven't collected that money yet!  Beiseker has around $250,000 owing in unpaid taxes but the province still yanks tens of thousands of dollars out of our account for the Education portion.  No questions, no comments, no deferral; nothing!
• I'm worried that over the next twelve months, other small programs and grants will be discontinued while the provincial government goes through its belt-tightening.  If Beiseker wishes these programs to continue, the money will have to come from our property tax pockets!

In my opinion, that's where we stand!  Most of these cuts are still in the "wait and see" file.

I hope we'll get more details in the weeks to come.

2013 Outlook for the Village

Thank you all so much for those birthday wishes, yesterday.  I enjoyed reading them.

So far 2013 has rolled in quite quietly.  I'm looking forward to this year and getting some action and/or closure on some of the issues still clinging on from 2012. 

• The cost of water:  In order for all the communities along the Aqua 7 Regional Water system to thrive, I believe we must lower the cost of water!  I'm working on that.  We've managed to hold the water rates to their present levels.  I hope we can better that this year.
• Grasslands subdivision:  I and the rest of Beiseker Village Council are determined to see growth over there in our stalled residential subdivision during 2013!  And by "growth", I don't mean weeds!  Stay tuned.  UPDATE: Grasslands is a "GO"
• The Bassano Station:  Although it is officially none of our business, I think I speak for the rest of Beiseker Council when I say something has to happen there this year!  This project has been dragging on for years now.  Time to get it done!
• Taxes:  It is going to be a challenge to keep property taxes in line and offering the same level of services or better, given the increased costs and the amount of back taxes still owing.  I firmly believe we can do it with a little village belt tightening and a sharp pencil!

In my opinion, those are the four "biggies" for Beiseker this year.  There are a myriad of smaller problems and issues we'll have to address and I think all on council are anxious to tackle them!

Great Candidates' Forum!

I was very pleased to be able to attend the candidates' forum this past Monday evening.  I decided before I left home that I would listen and not speak at the forum.  I stuck to that.  All of those who came needed to hear from the candidates; not me!  I was very impressed with all three candidates.  They stated their cases well and explained their positions clearly.

One point mentioned was that of the high mill rate in the Village.  The insinuation was that a lower mill rate was preferable.

As explained in a blog post I made about a month ago, the reason our mill rate went up was that the total value of all our properties is lower this year than last!  If  the total value of all our properties had risen or stayed the same, our mill rate would have actually dropped.

The mill rate is set by council using these steps:

• After careful budgeting, council decides on the minimum amount of money needed to operate the Village for one full year.
• Council then looks at the total assesment and basically divides that figure by the amount required based on so many dollars taxed per thousand dollars of assesment.

Another point was that of providing recreational and cultural facilities in the Village.  One should always be aware that every public arena, library, swimming pool, playground, splash park, skate board park, art gallery - or any other cultural or recreational facility - built in Calgary is meant to serve, be maintained, and be funded by thousands of people (taxpayers)!  

Overall I was very impressed with the responses from the candidates and I am looking forward to having one of them join us around the council table!

Streets, Lagoons, the new Firehall, and Taxes!

We had an excellent council meeting last evening (Monday, June 11). 

First of all, I was able to give Public Works Foreman Bill Hnybida and his crew the praise they deserve for getting the Village all ship shape for last weekend's Country Fair.  I also thanked Gail Peckham for all of her hard work getting things organized here at the office Saturday morning.

We discussed your concerns with the street cleaning project.  Council and Bill agreed to investigate the situation and find solutions for next year's street cleaning project. 

We were also very concerned with the Chinook Crescent paving project, which seems to have stalled again. I have no idea why this project is taking so long.   We asked our own engineers to find out why these crew keep vanishing.  Maybe the paving crews are getting lost following their GPS to Beiseker!  We also asked our engineers to remind these wayward crews that the completion date is fast approaching!

Next came the sewage lagoon.  The lagoon needs upgrading to meet new environmental standards.  This will be started over the next while. 

The new firehall appears closer to reality now.  Critical decisions are to be made this week and the project is to proceed quickly after that.  We should have a new firehall within about two months after that.  Stay tuned on this one.

Last and certainly not least, we set  the tax rate for 2012.  As I mentioned before, our overall assessment dropped by more than $3 million, but the cost of running the village either remained the same or increased.  Our Chief Administrative Officer (CAO) worked over the budgets for every Village department and brought a proposed final 2012 budget to us last night, which we accepted. 

We then set our millrate with a 4.5% increase.  Add to that the 1% the School Boards want and the total increase will be 5.5%.  It is based on your assessment, so some of you will notice an increase while others who were assessed at a lower amount may notice a small decrease. 

Overall, I was very proud of our CAO and Village Council for keeping the village portion of the increase to less than 5%.  I hope you all will not notice any drastic changes in the delivery of services around the village over the next twelve months. 

Your tax notices will be coming out over the next few days.  Check them over and let me know if you have any concerns.

Taxes!

Yesterday morning (Saturday, June 2) the Council of the Village of Beiseker met to discuss the 2012 budget and start the process of setting a mill rate for this year.  

We had an excellent meeting.  Our Chief Administrative Officer (CAO) had drawn up a proposed budget.  It was up us to go through it line by line and recommend changes.  Our CAO will then take our changes back, work them into the budget figures and bring them back to council at our next regular council meeting.  At that time we will either accept the changes and declare a mill rate or send it back for more modifications.  By law we have to declare a mill rate by the end of June.

Something alarming is that our Overall Assessment has dropped more than three million dollars!  That means that if we all sold all of our Beiseker properties today, we would receive three million bucks less than we would have last year!

Some properties were assessed higher and others assessed lower, many remained close to their 2011 assessments.  It's all based on formulas created by a mysterious process called Market Value Assessment (MVA).  It basically declares that if a similar property in a similar place sold for a certain amount, that's what my property is worth! 

Yes, I know that there are flaws in that logic, but that's what the provincial government says we have to do.  Municipal politicians from all over Alberta have complained to Municipal Affairs about this MVA system for years to no avail.

Council must estimate as closely as possible, how much money our municipality will need to operate for one year.  We must then set a mill rate to raise that amount of money based on a one dollar tax for every $1000.00 of assessed value.  Another provincial rule says that a municipality cannot submit a deficit budget.

We pored over the figures for more than two hours and made some important decisions.  Our Overall Assessment has dropped but the cost of operating our municipality has increased!

I hope we gave our CAO enough guidance so that she might work out our budget and enable us to declare a mill rate at our next regular council meeting.  That's about all I can tell you right now because nothing has been officially decided beyond that. 

Our next meeting of council will be held on Monday, June 11, 2012.

Bean Counters Report In!

At last week's Village of Beiseker Council meeting, our auditors reported to council on the financial situation of the village at the end of 2011.  It wasn't pretty! 

Two main things contributed to Beiseker's cash shortfall at the end of 2011; the Alberta government's slow transfer of funds and over $300,000 of owed taxes!

1. Slow Payments;  Beiseker had three major projects to pay for in 2011.  They were the Beiseker Airport repaving, Main Street upgrading, and Chinook Crescent repairs.  The first two projects were to be paid for by provincial grants.  But the contractors want to be paid as soon as their work has been inspected and deemed satisfactory.  The Village of Beiseker had to pay the contractors even though the promised provincial grant money had not arrived!   
2. Back Taxes Owed;  As mentioned earlier on this blog, Beiseker has been unable to collect over $300,000 of property taxes even though it must still pay the education portion to the province in full!

Problem number one has been solved; the provincial bucks are here!  But problem number two is still with us.

The solutions;

• The Village will have to borrow some money to pay the bills while we wait for our 2011 tax bucks to trickle in.
• If you are one of those who are having difficulty paying your 2011 property taxes, contact the Village of Beiseker Office (403-947-3774).  There is a good possibility that you can make a plan with the Village to pay those taxes over a longer period of time.
• Village council will likely have to scale back or postpone some projects over this upcoming construction season until we have full funding in hand.
• We will be asking the provincial government (through the AUMA) to speed up future transfers to us and other small municipalities so we might avoid these cash crunches.
• We will also be asking the provincial government (through the AUMA) to consider collecting their Education Portion of the property taxes based on a formula related to the percentage of taxes collected.  

The problems cited here do not constitute a "Doomsday Scenario" for Beiseker.  It is just simply a minor glitch.  But Village Council is determined to make sure we get Beiseker out of this situation before it does get serious.  Stay tuned.

Trash and Taxes

TRASH: After the snow melted from the ditch on the west side of Beiseker Airport, pilots noticed paper and plastic bags blowing across the runway.  We went to investigate.  We found a whole pile of household garbage thrown in the ditch about 400 yards north of Highway #9 along that road allowance!  How would anyone in their right minds confuse a rural road ditch with a landfill site. 

The authorities told me I would have to catch the culprit in the act of dumping it there and get a vehicle licence number in order to press charges.  We (Rocky View County and Beiseker's Public Works) cleaned it up. 

If you ever see a suspicious vehicle with folks throwing garbage from it, get a plate number!

TAXES: As you know, the provincial government adds on an "Education Portion" to your property taxes each year.  We collect it but it's their money!  Today they came to collect their first installment. 

We owed the province $70,000.00! 

But over 20% of Beisekerites haven't paid their 2011 taxes yet!  We still owe the province over $70,000.00!  We paid it, but that payment severely hurt our village cash flow!  Right now there is a little over $300,000.00 of unpaid 2011 tax money owed the Village of Beiseker!  But the province doesn't care - They just want their $70,000.00! 

Those amounts might not seem much if you're looking at a big city, but it sure matters here!  Some of our summer projects may have to be delayed until these back taxes are paid.

Seventh Street

Thank you (who ever you are) for your comments regarding 7th Street paving. Some properties would experience a greater increase than others according to the number of feet actually fronting on the street.  In other words the longer the sidewalk across the front of your property, the more you pay! 

We will probably be asking the residents along that street again whether or not they would like their street paved.  And again it will be their democratic right to turn us down by petition.  We (Council) would like to have all the streets in Beiseker paved.  Paved streets are easier to maintain, cut down on the dust, and they raise the resale values of the homes there.  We would like to have the provincial streets grant program pay for them but that could take decades!  That's why a local improvement is considered.

Are Local Improvements the Answer?

I have received responses to my post yesterday on paving streets in the village.  Other problems have been mentioned such as sidewalks and existing paved streets in need of big-time repair or replacement.

Other municipalities have addressed these kind of issues by declaring them a "Local Improvement".  That means that part of the cost of the major repair or replacement of the street or sidewalk can be assigned to the property taxes of those residences fronting onto the sidewalk or street being repaired or replaced.  It is called a frontage tax.  Taxpayers pay a couple of dollars per foot of frontage per year for a period of years or they are given the option of paying it off outright.

This is quite common in a city's or town's older residential areas where the streets and sidewalks have seriously deteriorated.  The cost of streets and sidewalks in new areas are paid for by the developer and added on to the price of the new homes there.

Taxpayers along the street being repaired or replaced have the right to cancel the project by petitioning the municipal council.  This is what happened along Seventh Street a few years ago.

Local Improvements are a way to go to get some of these projects done sooner than the village could otherwise.  The village has to wait for street improvement grants to be issued by the province before such work can proceed.  At our present rate, all existing street and sidewalk issues would be completed well into the 2030s!  And that's not counting any new issues which might pop up!

Let me know what you think.

Taxation

Municipal property taxes are based on two things: The total assessment and the mil rate.
Each year the value of every property within the municipality is calculated. This calculation is based on the sale of similar properties elsewhere in the municipality. This new way of calculating the value of your property is called Market Value Assessment (MVA). This process was introduced by the provincial government a few years ago. Every Alberta municipality has to use it, they have no choice!

After that process is completed, all those assessments are added up to get the municipality's Total or Overall Assessment.

After going over the proposed budget in great detail, the municipality decides how much money it needs to operate over the next year. It then looks at its Total Assessment to assign the Mil Rate.

The Mil Rate refers to the number of dollars and cents each property owner must pay per thousand dollars of their MVA.

Beiseker's Village Council has steadfastly refused to raise the mil rate. Each year our total assessment goes up as new homes and businesses are built and sold. By keeping the mil rate the same and relying on the increase of the total assessment, taxes are kept at a consistent level year to year.

Studies have shown that Beiseker's property taxes are below the provincial average for a municipality of our size.

Some individual property taxes will increase while others will decrease. Others will stay the same.  Overall on average we have managed to keep taxes down.  The mil rate is based on the overall total assessment, not on individual property assessments. 
Over the next three years I will continue to make sure the people of Beiseker get the "best BANG for their tax buck!".

I am also working on a proposal to allow municipalities to reduce the burden of the MVA on long term homeowners on a fixed income.