You ain’t seen nothin’ yet!

It is budget time again with all three levels of government deliberating and finalizing their operating budgets. 

The federal government budget is being delivered next week. The province of Manitoba and city of Winnipeg will weigh in the following month. However, the focus of this column is school board budgets which are being determined this month for finalization in March.

Pembina Trails School Division just held their budget meeting and proposed a five per cent increase. Louis Riel is meeting this week and will likely propose another increase based on similar reasons cited by school divisions like Pembina Trails — employee wages continue to rise and other operating costs like fuel are increasing. St. James-Assiniboia has already put out a draft budget calling for a 4.63 per cent increase. 

None of the divisions are planning, nor want to, cut staff, programs or services. Of course, they are indicating there are more pressures on them to deliver on special needs education and other support services. 

So, in 2005, like in previous years, there is really nothing new with school boards, which cite a lack of wiggle room to make any real changes to keep school taxes down. They say the province effectively determines how education is run and has a firm grip on the purse strings which tie their hands.  

Property owners end up picking up more of the costs of delivering a  very expensive education system. And, there appears to be no end in sight at either the provincial or division level to provide meaningful tax relief to homeowners or businesses. 

With the exception of Saskatchewan (things are about to change there as Premier Lorne Calvert has made a commitment to take a significant portion of his province’s oil and gas royalties and apply them directly to education property tax relief), Manitoba stands out as the undisputed leader in the country at placing an inordinate level of education property tax burden on its residents. Most provinces have recognized education is a societal benefit, like health care, so they now fund education from general revenues.

The education property tax burden continues to increase every year, and the result is an unfair and inequitable system that taxes one’s choice to invest in a property or properties (people in Manitoba still covet owning a recreational property despite having no representation to vote in that school 

division area and be faced with another education property tax hit), not one’s ability to pay.  

Lorne Weiss, the chair of the Manitoba Real Estate Association’s political action committee, told CBC Information Radio host Terry McLeod, you can have very similar homes standing side by side with one having a senior on a fixed pension and the other with a double-income working family — yet, they both pay the same education property taxes. 

Of course, another example is one family choosing to invest more of their hard-earned money in a larger, more expensive home than someone else in the very same area and within the same school division boundaries. As a result, there can be a substantial difference on the amount of school taxes one pays over the other. Is there any difference in the education services delivered from one home to the other? 

Even if you took a similar-sized property in different parts of the city with different assessment values and different mill rates based on the local school divisions’ overall assessment base, you could have a notable disparity in what the one property owner is paying in comparison to the other.

To top things off, next year Winnipeggers could be faced with significantly higher education property tax increases in addition to the annual division budget increases, since property assessment will be based on 2003 property values, not 1999 as is the case this year. 

For the last reassessment, despite an increase in property values, the city lowered the mill rate to ease the tax burden. But, that did not happen with school boards. They made no downward adjustment and so benefited directly from the rise in assessment values. 

With average residential assessment increases projected to be up well over 20 per cent — some areas even in the 30 per cent range — and the fact school taxes now represent 50 per cent of the total property tax bill, a number of property owners in 2006 may be in for some very hefty school tax increases if school boards hold true to what they did in 2002.

The Winnipeg Free Press in last week’s Saturday paper did an editorial on this very point, writing, “The Winnipeg Real Estate Board has put its finger on a significant blind spot in the financial transparency of school boards.” It said this is taxation by stealth and must end. 

The province has to step in before 2006 to deal with what is becoming unacceptable to an increasing number of Manitobans who want change for the better. 

The province cannot continue to fund a core provincial responsibility on the backs of property owners. A shift in funding education from property owners to provincial general revenues needs to occur.