Looming large in the not too distant future is 2006 and that becomes more apparent every day as 2004 comes to an end. Before explaining the significance of 2006 to property owners, let’s step back and start with what has been going on this year.
A number of Winnipeg Real Estate Board members have been participating on the 2006 property reassessment advisory groups to offer their expertise and input on the values the city’s Property Assessment Department is arriving at for all properties based on the 2003 reference year.
By now, many residential property owners will have received their preliminary estimates of assessed value based on 2003 market values. By the end of January 2005, all residential property owners should have received their preview letter on their assessed value. On May 30, 2005, everything will be finalized and all Winnipeg property owners will be issued their 2006 assessment notices. They will be subject to pay property taxes on their new assessment value when the tax bill is delivered in June 2006.
On average, the value of residential properties (four dwelling units and under) increased 23.2 per cent in the period from 1999 to 2003. Values vary according to the residential property type and the area of the city they are located in. For example, an area like Linden Woods has experienced a higher than average increase — some houses have gone up 35 per cent.
Herein lies an issue that will grab Winnipeggers’ attention as they realize what may happen to them when they receive their property tax bill in 2006. Based on the last property reassessment that came into effect in 2002, there is a distinct possibility history will be repeat itself.
While properties in Winnipeg did not increase to the extent they did in this current reassessment, they did go up nonetheless, and mill rates were adjusted on the municipal tax side to minimize increases on a property — in line with the average increase for that property type.
This was not the case with school taxes. The mill rate was left the same and a number of local school divisions increased the rate. In many instances, not only did you experience annual increases in your special education levy (school board levy), but paid out even more towards school taxes because the mill rate (percentage charged against allocated portion of assessed value - 45 per cent for residential) was adjusted higher.
In 2004, school taxes represented 53.8 per cent of all property taxes collected in Winnipeg. The city’s eight school division’s total take is up nearly $20 million this year and that amount represents a 6.3 per cent increase over 2003. Total school taxes on residential property are now a higher percentage than municipal taxes.
In total dollars, the total combined levies (includes provincial education support levy as well as the school board special levy) for Winnipeg in 2004 amounted to $439 million which was 3.3 per cent higher than 2003. This is equivalent to property owners giving back to the province over three MTS Centre’s worth of value to cover 43 per cent of the total operating expenditures of the education system.
When you hear Premier Gary Doer speaking so proudly of his contribution to the MTS Centre — he is to be applauded for getting behind it with providing some provincial support — you might remind him that this year Winnipeg property owners offered up over three times the total cost of one MTS Centre to pay for a service his government is directly responsible for delivering.
Will it soon be four MTS Centres if we do not change the way we fund our education system like other provinces have done across the country?
To be accurate, Saskatchewan is the only other province to rely on property owners to the extent we do to pay for a strategic core public service, but that is about to change. Property tax relief is on the way. Premier Lorne Calvert has pledged to dedicate 30 per cent, or approximately $102 million of the extra $340 million his province is receiving from equalization payments, towards bringing down education property taxes.
Saskatchewan came to the realization something had to be done, because they are so out of line with other jurisdictions, especially Alberta. Winnipeg property owners are in the same boat. Looking at some properties in Calgary this year that were in the $200,000 price range and comparing them to a $200,000 property in Winnipeg, the tax differential is almost three times higher. Taxes on Calgary properties are $1,500 to $1,700 where Winnipeg’s are around $4,500.
Not only will Manitoba become the highest property tax jurisdiction in the country, it will be viewed as a leader in this unenviable category on the world. An OECD report in 1999 ranked Canada’s property tax rates at the top with a few other countries, and we all know what has happened to our property taxes in Manitoba since 1999.
And, other than the province saying they will eventually eliminate the provincial education support levy, there has been no indication they plan to do anything about the escalation in school board taxes or the special education levy on property. There seems to be no end in sight for further increases in school board operating budgets, whether it be unrestricted arbitration, special needs legislation, increased amalgamation costs through higher wage settlements, new workplace safety and health requirements and rising transportation costs.
Of course, no Manitoban wants to compromise the quality of education delivery, but inequities in service are beginning to emerge across various school divisions. The school boards can not always pass on all of their increased costs of operation to property owners. Important programs do end up getting cut.
It was very telling that the spectre of a big jump in school taxes was raised recently in relation to the 2006 reassessment. A school board official made it quite clear the mill rate wouldn’t be lowered for the simple reason the board was not prepared to compromise the quality of education delivered.
Simply put, the current system of funding education is antiquated, well out of step with other jurisdictions, ineffective, unfair and unsustainable. A child’s education should not be based on the local property tax base.
Allowing property taxes in Manitoba to get too high is punitive to many property owners whose wealth is solely, or largely, tied up in the form of property, whether it is a residence or a business. And, if someone is fortunate enough to still invest in a recreational property, they will certainly be taxed again and be subject to a higher education tax burden.
The province is currently hiring a consultant to help them rebrand our province. Unless they do something meaningful to deal with shifting education funding off of property, no matter what rebranding they come up with, it will not hide the fact that Winnipeg’s housing affordability is being eroded.
In 2006, many property owners at Christmas time will likely be feeling more Grinch-like since they will have to shell out hundreds more dollars in education taxes.