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Council mulls mill rate and sets the municipal tax take for 2017
The cart was before the horse as city council set the mill rate for its new budget, and some confusion reigned about the process.
The mill rate, also referred to as the millage rate, is a figure representing the amount per $1,000 of the assessed value of property, which is used to calculate the amount of property tax.
In Grand Forks the city crafts and drafts its budget — which received final approval Monday night at $3,698,273 — before it sets the mill rate. Once it has determined the final amount, the city figures out how much of the load the different tax classes will shoulder to total that amount.
Several city councillors questioned the process and Coun. Julia Butler asked for a description of how the city calculates the mill rate.
Grand Forks city chief financial officer Juliette Rhodes said the mill rate in the three options presented to council was based on the total revenues needed, and the city used the multiples for each tax class.
“I think the confusion is over the determination of revenues itself, because at the final budget workshop, we had an example of what revenues we would be looking at with the mill being kept the same,” Rhodes said.
“We determined that that would be insufficient to fund infrastructure renewal, therefore it was decided to add an additional 3.5 per cent to those figures.”
Section 197 of the Community Charter requires the city to adopt an annual property value tax bylaw to establish the tax rates for the collection of municipal revenue as provided in its financial plan, as well as the amounts to be collected on behalf of other local governments or public bodies.
The amount of 2017 property tax revenue included in proposed Financial Plan Bylaw is $3,698,273.
The city has not yet received the 2017 requisition for the Regional District of Kootenay Boundary and Grand Forks Hospital, but expects to do so prior to the date of first three readings for the proposed bylaw (April 24).
The city had established policies regarding property taxation in its annual financial plan and asset management policy which, in general terms, state:
- that tax shifts and redistributions between the classes will only be undertaken after considerable review and phased in gradually over time; and
- in setting tax rates, council will take into consideration the tax rates and conversion ratios of other municipalities and the tax share borne by and conversion ratios for each property class.
The options were:
- option one — The tax rate for class four (major industry) is fixed at the same rate as 2016, while the conversion ratios (multiples) for the remaining classes are the same as for 2016. This is consistent with tax rates set over the last three years (2014-2016);
- option two — The tax rate for class four (major industry) is increased to collect the same amount of tax revenue as in 2016, while the conversion ratios for the remaining classes are the same as in 2016;
- option three — The tax rate for class four (major industry) is increased to collect the same amount of tax revenue as in 2016, as in option two, and the rates for classes five and six (light industry and business) are increased slightly more than the increase for residential, recreational and farm rates. The rationale for this is to re-establish equity between the classes by compensating for the higher market value increases in residential properties versus commercial.
The options and associated tax rate calculations were based on the revised property value assessment roll which was just made available, said Rhodes. There has been a “fairly significant reduction in residential values from the completed roll used in previous revenue calculations,” she added, with a revenue difference of approximately $16,000.
“This was due to a successful appeal to the Property Assessment Review Panel which was unknown at the time the completed tax roll was produced,” she said in her report to council.
Although the 2017 distribution of property tax rates among the different classes has now been determined — council chose option two — it has yet to be accepted into bylaw. The mill rate will be voted on for first three readings at the April 24 council meeting.
“I think option two gives us the most balanced approach with keeping industry’s contribution the same as last year,” Butler said, “but at the same time does not raise the business mill rate as much as other rates.”
Based on option two rates, residential pays the majority of property taxes in Grand Forks at 53.99 per cent (tax rate of 5.0528), while major industry is next at 22.20 per cent (tax rate of 43.6629).
Business shells out 21.02 per cent (12.0762), light industry 1.43 per cent (14.8047) and utilities 1.32 per cent (40.00). Recreation/non profit and farm made up less than one per cent of property value taxes.