LAC LA BICHE - When four scenarios for the 2020 tax rates were presented to Lac La Biche County councillors, they went with option five.
At last Tuesday's county council meeting, councillors saw four initial versions of how this year's tax rates and tax collections will look. Some versions had slightly higher residential property tax rates, others had slight reductions to industrial rates. In the end, council favoured a hybrid version ... one of three additional scenarios they asked their administration to work on. A formal version of the scenario that will form the municipality's 2020 tax bylaw is expected to be back for initial approval at the May 12 meeting.
Scenario five, which sees the municipal mill rate — the county's portion of the overall tax rate — increase by four percent over last year, will actually be part of an overall 1.25 per cent reduction in taxes for most residential property owners thanks to reductions in requisitions for the Greater North Foundation and schools. The actual tax payments will also depend on property assessment values, which the county's senior administrator Dan Small says may see some changes in some areas of the municipality.
Because Lac La Biche County is classified as a specialized municipality, split mill rates can apply to urban and rural service areas. In the scenario being explored by council, only the residential mill rate in both the urban and rural areas would be increased over last year. Urban and rural business municipal tax rates would remain the same as 2019.
Little change at home
For a resident living in an average Dumasfield home near the Provincial Building within the Lac La Biche hamlet, the new scenario would see overall taxes drop from around $1,898 last year to $1,888 for the 2020 tax year. The drop in taxes happens despite a property assessment increase on average from $324,000 last year to $326,500 this year.
For an average home in Plamondon that was assessed last year at $409,000 and is now valued at $406,000, the change in taxes would result in about a $50 annual reduction from $2,399 in 2019 to $2,350 this year.
The assessment on an average bare quarter of farmland near Craigend last year was $20,000. The assessment is the same for 2020. But with the slight reduction in overall taxes, the owner would save a little less than a buck and a half — paying $117.53 in 2019 and $116.06 this year.
Due to an average of 12.5 per cent higher assessment values for 2020 on residential properties in urban and rural settings, Lac La Biche County coffers would see an additional $200,000 in overall residential taxes collected — about $3.8 million this year. Business taxes collected from urban ratepayers in 2020 will also see a slight increase due to an average of five percent assessment value increases. Projections in the new tax scenario put urban business tax revenues at $2.3 million for 2020, up $60,000 from $2.24million in 2019.
Big business, big bucks
Businesses in the rural service area — generally larger industrial operations — are forecast to generate the lion's share of tax revenue for the municipality. And again, since assessments are up — $3.4 billion in value compared to $3.1 billion in the 2019 tax formula — revenues from rural business are forecast to rise. Using the same municipal tax as last year, the municipality stands to bring in $62 million in industrial tax payments for 2020 — up from $57 million last year.
While the scenario sees a revenue increase, municipal administrators say they were looking for "a cushion" to offset unforeseen challenges that may arise in the coming taxation year. Funding of a million dollars has been expected from the provincial government as part of the ID349 land transfer — but there has been no official word on the money, as well, councillors are still expecting to pay their portion of the province's new policing funding. On top of that, there are expectations that industrial property assessments will see changes once a government assessment review is completed later this year, and councillors are also expecting that some industrial businesses may either not be able to pay their taxes this year, or won't be in operation anymore.
Councillor Jason Stedman said the scenario was a good compromise in very challenging times between preparing for future uncertainty and keeping rates within reason.
"It seems to make everyone happy along with having the potential for stability in the future," he said.
Not all on council agreed with the idea of increasing residential rates while keeping the others the same as last year.
Mayor Omer Moghrabi wanted to see reductions across the board.
'I believe in lowering all of them. I think big industries are hurting ...our community is hurting," the mayor said, explaining that the reduced tax revenue could be found other ways within this year's operating budget of $53.2 million, or from the $24 million in capital expenditures planned in 2020. "We can find some more efficiencies within our organization."
He proposed reducing the municipal portion of the industrial tax rate by almost seven percent and small business by 20 per cent — a potential revenue drop of $4 million from industry and $400,000 for small business in the municipality's budget.
Councillor Sterling Johnson strongly disagreed with reduced tax rates.
"We are not out of this. For us to drop our rates now... could be devastating to us next year. We don't know what is coming," he said.
Six of the nine councillors vote in favour of bringing the scenario back to the next meeting for final review.
With the increase to residential rates and none to the industrial ratepayers, the municipality is also making headway on a government-mandated formula calling for a ratio of no more than five-to-one between residential and industrial rates. The new scenario would put the ratio at just over 6:1. Mayor Moghrabi's option would have put the ratio below 6:1.
Moghrabi says the need to bring the ratio to the desired level is still very much on the minds of provincial politicians, and pressure continues to come from the "very highest level" in Alberta.
