Burden of education property taxes

When someone hears about school taxes, mill rates, the education support levy (was completely removed off residential property in 2006), the special education levy and equalization grants, their eyes glaze over. However, when they receive their property tax bill they take notice and for good reason. 

For residential properties, the increases in the special levy, or school division taxes, have in recent years tended to replace the provincial education support levy (ESL) as it was phased out. In 2006, despite the removal of the ESL, school taxes still represented 53.1 per cent of all property taxes the city collected. The percentages in 2005 and 2004 were 53.8 and 53.4, respectively. 

When you look at the two pie charts from Manitoba Education’s Frame reports, it shows the total percentage of provincial contribution to school operating funding when compared to property taxpayer funding (captured under the municipal category) actually went down from 2006 over 2005. 

As much as Premier Doer says education is his government’s top priority, the NDP apparently still continues to believe property owners can carry an increased education funding burden.

A Professionally Speaking column last spring indicated the 2006 reassessment meant that ratepayers would be paying property taxes based on higher assessment values (2006 assessment based on market value increases from 1999 to 2003), even if the school divisions lowered their mill rate. The increase would also apply, regardless of a lower mill rate, to the province’s ESL that continues to be applied to non-residential properties. 

The Frame reports bear this out. Revenue from property taxes went from $502,206,006 million in 2005 to $542,192,264 in 2006, an eight per cent increase. As for provincial revenue, it went from $961,248,241 to $979, 096,744, a less than two per cent increase.

The WinnipegREALTORS® Association is on record as calling for the complete elimination of education funding through property taxes.  Yet, school taxes on property are still levied without consideration of the homeowner’s income or ability to pay. 

Some homeowners do not have the financial wherewithal to maintain their homes due to their higher property tax burden. They may even be forced to sell their most significant lifetime investment at a less than optimal price. 

Education is an essential public service and should be funded through provincial general revenues in the same way as health care and social services. 

How does the fact one owns a home relate to the education services they are consuming as property owners? 

The Louis Riel School Division’s 2005-2006 budget documents show that within its boundaries are 107,000 people and that over 50 per cent of households do not have children. 

In an environment of taxes based on property value that are on an upward trajectory because of school taxes, where is the incentive to improve one’s property or even to maintain it? 

The more citizens improve their properties, the higher the valuation. The higher the valuation, the higher the school tax even though services have not increased!

As a result of the unfair nature of education taxes on property, many provinces have gone towards complete funding of education through general revenues. In other instances, provincial governments fund a greater portion of education from general revenues. 

Even Saskatchewan, which, like Manitoba, is known across the land for placing too heavy a reliance on property to fund education delivery, has made moves to reduce the education tax burden on property owners. Our neighbouring province will inevitably do more than Manitoba on the education property tax front because of its favourable economic prospects. 

There is also the question of how competitive Manitoba wishes to be in attracting new businesses and people.  How serious are we at keeping our own youth, skilled workers and professionals from moving away, if we remain non-competitive on important matters such as property taxes?

A Probe Research poll conducted jointly by the Manitoba Real Estate Association and WinnipegREALTORS® in the fall of 2005 showed the majority of Manitobans want the provincial government to change the way it funds education. Of the over 1,000 people surveyed, 62 per cent said they agree that funding of  Manitoba’s education system should come out of the province’s general revenues. The number jumps to 72 per cent for Manitobans 55 and over. 

Only 13 per cent of the respondents said education funding should continue to come from property taxes. 

Even in 1999, southeast residents of Winnipeg ranked education taxes on property very high on a provincial pre-election survey  that asked them to list a number of  issues in order of their importance. Seven years later that concern has certainly not dissipated.

The Manitoba Real Estate Association and its partners, which includes WinnipegREALTORS®, recently launched a province-wide campaign called letspayfair.com, designed to engage all Manitobans in coming to appreciate the magnitude of this important issue. The campaign gives them a quick and convenient method to tell politicians they want education funding taken off their property tax bill.

The letspayfair.com website includes an electronic letter to send to your MLA , provincial party leaders or other key players such as Finance Minister Greg Selinger and Education Minister Peter Bjornson. It calls for a more adequate, fair and equitable way to fund a strong province-wide education system.

Another round of school board budget deliberations are underway and further property tax increases will be discussed with no offsetting provincial ESL decrease for homeowners to keep their total education tax bill down. You should be asking your trustees about the fairness of our current funding model and what they may do to change it.

The WinnipegREALTORS® Association has just received a property tax survey that covers eight major Canadian cities, including Winnipeg, that shows the effective property tax rate homeowners pay based on family incomes of $50,000, $100,000 and $150,000. A preliminary review shows that Winnipeg’s total property taxes (municipal and education) are among the highest in the country. 

Another development  is the addition of a new field to WinnipegREALTORS® MLS® system that breaks down a property owner’s municipal and education tax bills; throughout Winnipeg it’s close to a 50-50 split.