BONNYVILLE - The MD of Bonnyville has seen a drop in their overall assessment value by five per cent and their crunching the numbers to deal with a $2.8 million shortfall.
Tolulope Maraiyesa, general manager of corporate services for the municipality, laid out the numbers during their committee meeting on Wednesday, April 21.
"During the 2021 budget deliberations, council made it clear that the tax rates were going to stay the same, so we're presenting the 2021 assessment and the taxation revenue to be generated based on the 2020 tax rates," she explained, adding the pending ID 349 annexation wasn't included.
"That's why we have not presented you with a tax rate bylaw. We're bringing this information ahead of time so that we can discuss the municipal tax rates and then bring the ID 349 information in once we receive it so that our tax rate bylaw doesn't experience any delays and result in late taxation notices going out," Maraiyesa explained.
The MD's residential assessment for 2021 decreased by about six per cent. For 2021, that number comes in at $1.6 billion, a drop of about $106 million from last year's $1.7 billion.
Farmland saw a slight dip of $46,230, but is still sitting at over $63 million.
According to Maraiyesa, when it comes to non-residential there's a net change of six per cent. Vacant properties were assessed at just shy of $12 million for 2021, and other at $353 million. The small business category, which falls under the non-residential assessment class, saw a $23 million difference between 2020 and 2021 for a total of $53 million.
Machinery and equipment is down by four percent for a total of $1.5 billion, and linear is also on the decline by about six per cent for $1.6 billion.
"The total decrease in assessment as a whole is about five per cent," Maraiyesa outlined for council.
Overall, the municipality's assessment for 2021 excluding exempt properties is $5.37 billion, a $282 million drop from 2020's $5.65 billion.
When factoring in properties exempt under the Municipal Government Act (MGA) such as churches, the MD's total municipal revenue estimated for the year is $58 million.
MD faces $2.8 million shortfall
With a budgeted revenue from taxation to equal about $60.8 million, and a municipal revenue of $58 million, Maraiyesa explained the MD now faces a shortfall of roughly $2.8 million.
Rather than tap into reserves to cover the balance, Maraiyesa recommends council consider scaling back their capital plans for the upcoming year.
"I cannot professionally recommend that council tap into this reserve to fund taxation this year, just to avoid cash flow issues and also to be able to have funds should the MD have an emergency," she stressed.
Reeve Greg Sawchuk asked Maraiyesa for advice on funding the shortfall.
"My only suggestion at this time would be that we have to take another look at our 2021 budget and consider looking at our projects from the budget to fund the shortfall in taxation," she said. "Last year, we did have a shortfall as well, and we did fund it from that reserve."
Maraiyesa noted council could also review their tax rates heading into the future considering the municipality's assessment has been on the decline for years.
Talking tax rates
Should council keep tax rates in line with 2020, residential properties will remain at 2.76, while farmland will be set at five, non-residential vacant properties at 14.5, non-residential small businesses will stay at 11.6, while machinery and equipment and the other and linear categories will remain at 14.5.
"I have been told we have kept the tax rates the same for years because when the assessment was going up and the promise was made to residents, but what is the end date for that? We continue to hold onto the same tax rate. There are lots of scenarios we can run as administration as well where the tax rate might go up, but you don't actually pay any more than you paid last year, it just compensates for the decline in the assessed value of your property," she explained, adding the money coming out of residents' pockets doesn't change, just the tax rate does.
Maraiyesa continued, "If we continue along this route and we don't see an increase and we keep the tax rates the same, we would have to take a look at the budget on an annual basis until the economy picks up."
"By leaving the tax rate the same year-over-year, what's happening is the amount of money coming in through taxation to fund the projects and services, now fluctuates which means in years where that dollar amount is less, you have to go to other places to make up that money or cut things out of the budget," Calvin Bespalko, manager of administrative services stated. "When the market value increases, then you have new monies you aren't aware of."
This is why he prefers the method Maraiyesa suggested, increasing taxes based on assessments. This way, residents and business owners pay what they pay and the MD knows what to expect when it comes to taxation revenues.
Coun. Mike Krywiak refused to increase the tax rates this year, describing reviewing their budget and finding the dollars there as "the only option we have."
"Now is not the time to increase the mill rates. We made a decision that if the assessment goes down, the mill rate will stay the same as when the assessment went up, we kept it the same. This is not a good time to increase the mill rate. We have to look perhaps at the budget and go through the budget again," expressed Krywiak.
Municipality to keep small business sub tax class
The MD has decided to continue to offer the small business sub tax class for the upcoming year.
"They pay 80 per cent of the non-residential tax rate. This was increased from 75 per cent to 80 by council because of COVID last year, to recognize the small businesses in our municipality, and we've kept it at that as well," detailed Maraiyesa.
However, in order to be eligible, small businesses with less than 50 employees must notify the MD of their intent to take advantage of the program.
Bespalko went into further detail for council.
"Every year what we do is send out letters to all of the businesses who had small businesses last year and ask them to reapply. It's an annual reapply. Right now, we have some of the information back, or some of the applications, and we do follow-ups," he noted. "We know there will be stragglers coming in throughout the year, so as my assessment team gets notified of these new applications and they qualify, we then make the changes on the assessment role to get the lower rate and they get a new tax assessment notice. That can happen throughout the year."