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New education funding announced: issue of property taxes still remains
Jan 28, 2005

The province may have announced public school funding will increase this year, but the overall funding system still needs a drastic overhaul, according to Lorne Weiss of the Manitoba Real Estate Association.

The association, along with the Winnipeg Real Estate Board, is part of a board-based coalition of business organizations and community groups that is lobbying to end the use of property taxes  to  fund education. 

The WREB has issued a policy statement calling for the elimination of all school taxes on property.

“The current model of funding education through property taxes no longer works,” said Weiss. “It is based on economic and social 

realities from the 1950s that no longer exist.”

Education and Citizenship Minister Peter Bjornson said the province has increased funding for special needs students, a new community schools initiative, and additional funding for student transportation and early childhood development.

He said the 2.8 per cent funding increase keeps pace with the rate of economic growth and provides an additional $25 million for Manitoba’s public schools in 2005-06. 

Funding levels over the past six years have increased by $129.8 million, the minister added.

Bjornson said funding has increased 16.8 per cent over the past six years which is 2.5 per cent higher than the actual rate of economic growth and almost 3.7 per cent higher than provincial inflation rates over the same period.

“We have also increased per pupil support by 18.3 per cent since 1999 compared to an increase of only 2.3 per cent from 1994 to 1999,” Bjornson said.

In 2004-05, total provincial support for public education is $1.2 billion or 71.3 per cent of the cost of operating the public 

education system. 

The Manitoba Association of School Trustees claims the percentage is actually only about 56 per cent if operating costs only are considered. The province gives a higher percentage because it also includes such items as building new schools and payments to teachers’ pensions.

The province covers 100 per cent of the cost of new schools and contributes half the cost of pensions. 

Weiss said property and education taxes cost a combined 2.75 per cent of the assessed value of a house for those who are buying their first home with five-per-cent down. “We are taxing this group close to 60 per cent of their equity annually.”

Despite having affordable house prices relative to other Canadian centres, Weiss said any economic advantage is lost when occupancy costs are factored in. Property taxes for education funding are a significant part of these costs, he added.

“This is not only a city of Winnipeg issue or an agricultural issue,” he commented. “This outmoded method of funding education impacts on Manitobans throughout our province, whether they live in rural or urban areas — north or south.

“It has serious implications on youth, 

seniors on fixed incomes and low-income families as well as business investment.”

What remains to be seen is how school boards will react to Bjornson’s funding 

announcement.

Despite increased school funding in past years, school boards across the province have continually  raised their share of the property tax bill.

Bjornson said since 1999, the province has provided $110 million annually in property tax relief.

He said the education property tax credit homeowner advance portion has been 

increased to $400 annually since 1999.

In addition, the phase-out of the education support levy began in the 2002 budget and continued in the 2004 budget, saving taxpayers $37 million to date and $98 million when completed.

He also mentioned the 50 per cent rebate farmers receive on their taxes, up from 33.3 per cent in 2004. Approximately 25,000 farmland property owners are eligible for the tax credit, saving them $20 million in 2005. 

“We will also follow through on our commitment to provide school divisions with a more direct and transparent allocation of the education property tax credit in 2005 by providing the resident homeowner portion of the credit, approximately $100 million, directly to school divisions,” Bjornson said. 

“This move will clearly show the effect of the tax credit related to school property taxes.”

Weiss said the system of rebates and tax credits amounts to smoke and mirrors, disguising the need to address the real issue of reform.

He called the lowering of provincial property taxes on farmland “a token gift. 

“The province is going about the problem of education funding on a piece-meal basis.

“If the government felt they were on track (to reform the system), they would never have thrown that bone to the agricultural producers.

“And, they’re only removing the taxes from farmland not the farm buildings where the bulk of taxes are collected,” he added.

“If it’s such a good model, why don’t they fund health care that way?”