It’s an annual ritual at this time of year. At least, it has become a yearly occurrence in Manitoba ever since the province began decreasing its share of education funding.
At one time, the province provided 80 per cent of funding for education, but that figure has since dropped to 65 per cent. In the meantime, school divisions have filled in the gap by approving annual property tax increases, despite warnings from past and present provincial education ministers to cut costs and rein in spending to prevent such increases.
Present Education Minister James Allum issued the same warning this year, but he was ignored. Allum may have claimed that education is adequately funded — the province announced $24.4 million in additional funding this year — but school boards seem to feel otherwise, as board after board, covering the length and breadth of Manitoba, announced property tax increases for education funding this year.
Recently, Winnipeg School Division, the largest school division in Manitoba, announced a 3.6 per cent property tax increase. The average price for a house in the division is $171,130 which translates into a $40 increase for the owner of such a house. Only $40? Well, putting this into perspective shows how the annual ritual has made a significant dent in homeowners’ wallets. Over the last three years, the division has raised property taxes by nearly 20 per cent. There is no question that it has been a hefty tax increase for primarily core area taxpayers.
The additional $24.4 million has not been equitably distributed across the province. Writing for the Free Press, Nick Martin called Allum’s funding formula “Confusing, complex, convoluted and confounding. Eighteen of the province’s 37 divisions received zero increase for the 2013-14 school year, while many others received a pittance. In Winnipeg, only Winnipeg and Seven Oaks school divisions received more money this year than last.
There is a hodge-podge of tax increases across the city.
In St. James-Assiniboine, where the strong industrial and business base has in the past allowed the division to keep at bay significant increases or maintain tax freezes, taxes will rise by 3.6 per cent. What this means is that the taxes on a $250,000 home will be $1,378.91.
St. James-Assiniboia can no longer boast of having the lowest education property taxes in the city, as that honour now belongs to Pembina Trails, where the increase is 4.2 per cent, but the tax bill is $1,367.63. Pembina Trails has the advantage of high retail development and an average home price of $372,000.
In Seine River, where the jump this year was by 3.65 per cent, that means an owner of a $250,000 home will pay $1,631.25 this year.
The highest increase is in Seven Oaks at 4.26 per cent. As a result, the owner of a $250,000 home will pay $1,631.25. But the highest tax paid for on a $250,000 home is in Winnipeg School Division at $1,699.76.
The lowest tax increase in the city is in River East Transcona, where the owner of a $250,000 home will pay $1,497.40, following a 2.6 per cent increase this year.
Not all divisions are created equal. The more wealthy school divisions with greater business taxes at their disposal spend more on education than the less fortunate divisions such a Seven Oaks. In fact, mill rates used to levy property taxes vary quite a bit between divisions across the city and province.
“It’s not fair that there’s 37 school divisions that tax differently,” said Lorne Weiss, a former president of WinnipegREALTORS® and the Manitoba Real Estate Association, which are members of the Manitoba Education Financing Coalition. The MEFC represents 40 organizations, which also includes the Winnipeg and Manitoba chambers of commerce, Keystone Agricultural Producers, the Manitoba Hotel Association, and the Manitoba Association of Cottage Owners.
It’s also not fair because the tax levied does not represent a homeowners’s ability to pay. That is the underlying problem of the current education funding system. Until it becomes fair, the assumption is that all Manitoba’s homeowners have an unlimited pool of wealth to draw from when it comes time for property tax increases to fund education. But income disparity is a fact of life — being a homeowner does not exempt one from living within the lower end of the money-earning spectrum. A senior on a fixed income is a case in point. And that same senior faces a double whammy this year, as the city has also raised its portion of property taxes by 2.95 per cent.
Weiss has argued that a homeowner can’t lop off an eighth of his or her house every time a school division levies another property tax increase.
The argument can at least be made that any city tax increase actually benefits homeowners and their properties through street improvements, sewer and water, policing, etc. But education funding by property taxes makes little sense. Education is actually a societal benefit and a core service, similar to health care and welfare, which are funded by general revenues derived from such sources as income taxes. Even Winnipeg city council acknowledged this when it passed a motion urging the province to remove education funding from property taxes.
Similar to municipal governments across the province, the MEFC wants the Manitoba government to fund education using provincial general revenues (visit its website at letspayfair.com).
“Provinces that have eliminated education tax have continued their commitment to education and have found other ways to fund education,” according to the letspayfair website.
“The Manitoba Education Finance Coalition, which supports removing education tax from property, expects the province to make education a commitment and fund it properly from general revenues and Manitoba Hydro reserves. The government’s practice of adding more and more responsibilities on schools — such as social services — without matching grants to support those new initiatives, is unfair.”
The province has a litany of tax credits and rebates in place to ease the school tax burden. Homeowners receive a $700 tax credit (seniors’ credit is higher and their share of the tax will end in 2015) and there is an 80 per cent rebate on farmland, but farm buildings are still subject to eduction property taxes.
Doug Chorney, the president of Keystone Agricultural Producers, said the system of tax credits and rebates is merely “putting a bandage” on the issue. “All that’s happening is we’re facing additional administrative costs rather than addressing the issue” of tax fairness.
“Over the last few years,” he added, “the province has played with removing ‘this tax levy’ and increasing ‘that education credit’ in a complicated game to fund education from property. Let’s make this simple and get education taxes off property.”
Until that time, the annual ritual of school property tax increases will continue.