In 2003, the city of Winnipeg collected 9.1 per cent less in real per capita municipal property taxes than it did in 1990, according to the study, Straight Talk: Property Taxes in Western Canada’s Big Six, by Casey Vander Ploeg of the Canada West Foundation.
But, while city hall has toed the line, school boards have been upping their share of property taxes for years. The same reports indicated that education property taxes have increased in real per capita terms during the same period by 7.5 per cent in Winnipeg. It’s a trend that Winnipeggers and Manitobans have become quite familiar with — what one hand gives, the other takes away.
Winnipeggers and Manitobans receive tax bills which actually reflect two taxes — municipal property taxes and school taxes on property. It is the school taxes which have risen to the point in this city where they now represent about 50 per cent of the total tax bill. And, that percentage is bound to increase since school boards have not made a commitment to at least freeze their share of the tax burden like Winnipeg Mayor Sam Katz has.
The danger exists that this projected increase could jump substantially within the next couple of years. Lorne Weiss, the chairman of the Manitoba Real Estate Association’s political action committee and former Winnipeg Real Estate Board president, said there now exists in the city the potential for “one big wallop.” Concerned groups said the impetus for the increase is the reassessment for 2006 which is based upon 2003 home values. Within Winnipeg, the assessed value of the average 1,200-square-foot bungalow is expected to go up by 23.2 per cent.
“There is no longer any room left in taxpayers’ pockets, nor tolerance, for tax increases,” said Weiss.
The municipal portion of property taxes doesn’t necessarily have to rise with a new assessment — it can, but it doesn’t have to. Property taxes are set by the council by first determining what is needed to run the city and how much it will receive from other sources — everything from business taxes to provincial grants to federal transfers — which is then used to calculate the mill rate. If the cost of running the city doesn’t go up sharply, then council can make do with a lower mill rate. If the costs go up sharply, then the mill rate can be adjusted upward. If the cost of running remains the same and the mill rate does not change, then the tax bill increase will be 23 per cent on both the civic and school side of the tax bill. But, the cost of running the city has not been rising dramatically over the years and thus civic property taxes have been able to decline slightly as shown by the CWF study.
The real problem is that school boards are not bound by political promises to keep property taxes in check. When the 1999 reassessment was completed, school boards did not readjust their mill rate down as did city council, which meant they raked in more money. And, the following year, they actually increased the mill rate which meant they raked in even more money.
Peter Squire, the public affairs director of the WREB, said the pattern of past experiences shows the potential for significant increases now that education taxes make up 50 per cent of property tax bills.
The WREB and the MREA are seeking allies to lobby the provincial government to lessen the impact of education funding through property taxes. In particular, they want the city to take a leadership role in the school property tax debate.
“There has to be a will to see (education tax) reform from the city,” he said. “There has to be greater leadership shown by our elected leaders. City council can, and should, take a position on this situation which is untenable. The city has to make a public statement that the province has to look at another source of funding.”
So far, Mayor Katz hasn’t taken a hard stand. He has only said to date that the province should allow two different property tax bills to be issued — one from the city and one from school boards. The present situation is that the city issues a single tax bill for all property taxes collected, though it is divided to indicate where the money goes. Even with this division, taxpayers still blame the city for all property tax increases since it’s the city that by provincial law is obligated to collect taxes for school boards. Katz’s point of sending out two different bills is to show taxpayers that it isn’t the city which is continually bumping up their property taxes.
There has been some inkling of creating a new way of funding for education. A report leaked to the Tories but not released by the provincial government recommends a one-per-cent sales tax increase. The Doer government has quashed the report by saying it wasn’t elected to raise provincial taxes.
But, it has been indirectly raising taxes by simply condoning a system that allows school boards to continually increase their share of taxes on property. Year after year, the education minister has told school boards to keep increases to a minimum, but this has had little effect as shown by past trends. Until true reform of the system is implemented, Manitobans can expect their school property taxes to increase every year.