Blackmore questions Given’s cost cutting and more

by David Biltek

In a recent posting on her facebook page Gladys Blackmore questions the veracity of statements made by Mayor Bill Given. To watch the video Blackmore has posted click here: Blackmore on cost cutting.

In this video Blackmore challenges the Mayor’s statements about cost cutting, saying despite the cost cutting  our taxes have risen 8%, and that the Council has settled wage increases for City Staff of 3.5% to 3.75% over next few years. And she challenges the need to hire KPMG, one of the big six accounting and business accounting firms in Canada to provide advice to Council saying this is just an added expense and says that this is evidence that City administration “…can’t get it done.”

I was unable to find the statements Blackmore says the Mayor made, so am unable to comment and will instead leave it to Bill Given to respond to this  if he chooses and if he does I will post his response here. Your Worship?

However there is one statement that Blackmore makes that on which I will comment because it has come up before from others and belies an understanding of our assessment and taxation system in Alberta.

Blackmore says: “…the bottom line is our mil rate is the highest in Alberta.”

It could be, but that is frankly inconsequential.  let me explain:

The mil rate (and yes it is MIL from Million in Latin), is calculated as follows: It is rather simple. The Municipality figures out in its annual budget how much money it needs from property taxes to operate over the upcoming year. (It first considers how much revenue it might expect from NON TAXATION revenue, e.g. grants, fees, licences etc). It is then told by City Assessment  what the “Total Assessed Value” is of all taxable properties in the City. The first number is divided by the second, multiplied by 1000 (hence the “Mil”) and the result is the Mil rate. The mil rate or taxation rate is then applied to the individual assessed value of  properties in the City to determine the taxes payable.

There are many factors that go into determining a mil rate: how much a municipality collects in NON TAX revenue, how much they collect in licences, grants, tickets etc. Also the total value of their assessment varies by the extent of  industrial lands and buildings, multiple family buildings, the value of residences ( obviously a municipality with more homes valued in excess of a million dollars will have a higher total assessment), number of high value office towers, and commercial buildings and land, plus the percentage of the municipality that is residential versus commercial. how much multiple family dwellings as opposed to single family residences, etc. Another significant factor is business taxes or licences; many cities and town collect a business tax, in addition to property taxes, for example Edmonton and Calgary both collect a separate business tax. Here in Grande Prairie we stopped doing that many years ago and now all is collected through property taxes (commercial property taxes).

So there are many things that go into determining the mil rate and comparing them sheds very little light on one particular city unless all the factors are considered.

And there is one other factor….values: since the tax rate or mil rate is applied to the assessed value (nominally the market value of a house)….you need to consider what values exists in a city; are property values high, low?… For example, there is a house in Calgary with which I am familiar, it is on a 25foot  wide lot, good location close to city centre, no garage, two stories and requires major renovations , is 101 years old, just sold recently at near $475,000. While in Grande Prairie, I do not believe there is a 101 year old house, but for $475,000 you could obtain a NEW 3- 4 bedroom house, with an attached double garage on a 75ft wide lot. In one case the house is below average value in the City while in the other it is above and the taxes paid will reflect that reality and that is the way it should be….comparative mil rate is meaningless.

The real issue: taxes and value for money, not mil rates

It is possible to have a low mil rate and high taxes or high mil rates and low taxes. Here is a  BC example of this

“The Mil Rate for residential property in New Westminster in 2012 was 3.5441. This compares to other municipalities across the Lower Mainland from 1.81 (West Vancouver) to 4.73 (Abbotsford ). Vancouver was 2.02. Across-the-board comparisons show New Westminster’s Mil Rate is higher than most, but certainly not the highest in the Lower Mainland. 
But how do actual taxes compare?
The average assessed value for residential property in West Vancouver is just under $2 Million. The average assessed value for property in New Westminster is about $550,000, so for the average homeowner, West Van taxes are $3,620; in New Westminster the same calculation is $1,949. Not even close.”   For complete article:  NW IN MY BACKYARD

Comparing mil rates between cities may be done but it does not shed any light or further understanding on the tax situation. and in fact may just obscure and confuse.

Taxation, assessment and how this applied in Alberta and elsewhere in Canada is a difficult study and for many people involved in municipal government it remains a challenge.

Any comments, questions?…mil rate or tax rate is an complicated topic….but what about taxes?, what do you think?

And…watch for news about Jackie Clayton, sounds like she will be running for Council.