The deputy mayor has admitted that the Town of Wolfville ties its budget to assessments. He did so in a letter on the editorial page of the CH yesterday [Feb. 2 ] Emphases in bold, and comments inserted in red, are ours.
Across the province, residential market values increased by 11.2 per cent. This reflects the relatively healthy housing market in most communities. This is the first year capping increases [he means here, we supppose, the increase that triggers a cap] have been limited to the Consumer Price Index (2.3 per cent for 2008). The change from the previous capping at 10 per cent has brought 278,000 properties under the program from the previous 37,000.
This might sound like a good news story, but I beg to differ. CPI has no bearing on municipal budgets and costs. Our community needs for increased policing, road work, sidewalks, recreation and solid waste management are not related to the CPI measurement. We may need more than CPI budget increases to meet demands for services.
Yes, you may need more (unfortunately you never, ever seem to need less) but there is a simple answer, Bob, which you surely know. YOU RAISE THE TAX RATE IF YOU NEED MORE. It isn’t hard to understand. If assessments increase then the municipality can drop the mil rate (it should!) to bring in roughly the same amount. If the budget requires more, the municipality can raise the rate. So capping of assessments should cause no restrictions at all on the revenue stream required for town expenditures. But clearly our deputy mayor does not understand this, or pretends not to.
Why should the province interfere with the property tax, the one major revenue stream of municipalities? Just imagine the howling if the federal government limited provincial income tax to a CPI increase!
We cannot believe an educated person, a deputy mayor and president of the UNSM no less, can put this misapprehension into print over his name. The province is not interfering with property tax, only assessments. Assessments are not taxes. The property taxes residents pay are determined and controlled by the TOWN. The amount each particular resident pays in property tax is determined by a formula – their assessment (supposedly based on market value) multiplied by a number (called a mil rate because it applies per thousand (or hundred) of the assessment value) – that number being determined and set by the Town based on what is needed for the budget . The total, adding up each resident’s share, produces the amount needed to pay for the town’s operations. If market values, and therefore assessment values, suddenly dropped by half, the effect would be similar to that of capping, but the town would still be able to obtain the same revenue stream if it wished. All it has to do is increase the rate, increase that multiplier number, to obtain the required amount from the total of the lower assessment values. This is not even calculus 101. It is grade school math.
Of course what is missing from the letter is why the Council and the administration would not wish to do that. Because then the town could not hide behind assessments, could not blame high taxes on assessments. People notice more when that multiplier is raised and they complain. This administration wants people to think that the Province, not the town determines the taxes we all pay, when in fact the Council does by the budget it approves. Council wants to be able to say – “we are holding the rate”. But remember this: Holding the rate means an increase in taxes in an increasing assessment environment. But doesn’t it sound better to say Council is “holding the rate”? What the deputy mayor fears is that capping assessments threatens to expose the deception.
Another thing Mr. Wrye said in his letter is –
CPI has no bearing on municipal budgets and costs
No? Any increase in the cost of living (reflected in the CPI) sure affects us. We don’t quite understand why the Town is immune. Gas prices have gone up for example- that is reflected in the CPI and presumably it costs more for the town. What he means to say, of course, is that the town doesn’t like its budget to be held down to the CPI percentage increase. Well, he should explain why town requirements exceed the CPI and perhaps he can, but he won’t get much sympathy from us until we can see the town actually trying to curb indulgent expenses which Council cavalierly commits to in the budget, on our tab.
We are against capping because, as Mr. Wrye points out, it skews the distribution of the tax burden and shifts the tax burden from some residents to others, often unfairly. But really this is not the Town’s responsibility and no business of theirs except as a matter of compassion and a personal sense of fairness. This inequality in the sharing of the tax pie is the problem and concern of the individual resident whose assessment is not capped and who therefore may be unfairly pulling more, relatively, of the tax weight than his neighbour. And that argument is not with the Town but with the province. Residents should certainly appeal to the provincial government to change this capping policy. And municipalities can support their residents in this appeal, but it really makes no difference to the town’s budget process, unless they lose residents from their jurisdiction because of it.
We have issues with the NS assessment process in general. It is unfair and not at all transparent. The formulas used to determine individual property values seem to be arcane and are not published. And there is something severely wrong when one municipality can phone up the assessment office and ask that certain properties be reviewed with the aim of obtaining higher assessments and not be refused!
Nova Scotia residents vote and can and should go to their municipalities, complain of higher taxes and ensure that Councils account for every expenditure. Tax increases are in their hands ; don’t let them tell you anything else.
Later: The Canadian Taxpayer Federation suggests a property TAX cap (rather than an assessment cap). Now there’s an idea.