School property tax increases could be on the way again in Manitoba.
Education Minister Nancy Allan increased provincial funding for the public school system Monday by $25.5 million, or 2.2 per cent, for the 2012-13 school year. The province pays a total of about $1.3 billion annually to help finance the system.
That's 13 years in a row the New Democratic Party government has funded public schools at or above the rate of provincial economic growth.
But not only is the increase among the lowest since the NDP took office, Allan yanked the tax-incentive grant away from school trustees after four years of the government using it to entice them to freeze taxes in return for the extra provincial cash.
"This is a tough economic time," Allan told reporters. "Everyone in this province knows we've had an aggressive tax-mitigation policy."
The province pumped $135 million into tax-incentive grants during the last four years, and that money has remained in school divisions' base funding from the province.
But with no new TIG money and normal spending increases running far beyond Allan's operating-grant increases, trustees face the choice of increasing taxes or cutting expenses.
"I am asking school divisions to exercise restraint," Allan said. "School divisions will do their due diligence. They'll have to look at what their expenses are."
Allan refused to say what level of increases in school property taxes she would consider acceptable and was emphatic she has not told school boards to cut payroll or cap tax increases.
"School divisions have never taken tax increases lightly," said Carolyn Duhamel, executive director of the Manitoba School Boards Association. The options for trustees, who must set budgets by March 15, are "increase your revenue, cut your expenditures, or some combination of both," she said.
Duhamel said most people in public education wanted an end to TIG because of shifting criteria for eligibility, difficulty in administering it and not knowing how much a division would get from one year to the next.
But they also wanted that extra money to be part of operating grants, to be included within the funding formula rather than left outside it, Duhamel said.
Manitoba Teachers' Society president Paul Olson said teachers welcome the stability of the operating grants exceeding inflation, but also want the province to fund public education 100 per cent, so how much each division can spend is not based on the local assessed values of residential and commercial properties.
"We expect government and the divisions to adequately fund education," Olson said. "If boards need to do that (increase taxes), then boards need to do that."
MLA Cameron Friesen, the Tory education critic, said the real story Monday is Allan failed to do anything to improve student achievement, but he had no suggestions of his own.
Tax hikes, cost cuts
only options to cover rising education tab
WHY could Education Minister Nancy Allan's announcement of $25.5 million in new funding for public schools, a 2.2 per cent increase, be considered bad news?
For several reasons.
Allan also cancelled the tax-incentive grant, which over the past four years pumped $135 million into the system for school divisions that agreed not to increase school property taxes. But there won't be a fifth year of the TIG.
Spending on public schools, with taxes frozen in 33 of 37 school divisions, rose $74.9 million this year, says the province's FRAME (Financial Reporting and Accounting in Manitoba Education) report. Spending went up 3.97 per cent, which is pretty normal in recent years. That expenditure increase was covered this past year almost entirely by government operating grants and by the TIG.
But with the TIG gone, that leaves around $50 million to be found to cover increased normal operating expenses. There are only two places trustees can find that money -- by cutting expenses, which means trimming payroll, or by increasing school property taxes.
The province covers about 65 per cent of the $1.96-billion public school system's cost, so Allan's 2.2 per cent increase becomes 1.3 per cent when applied to increased funding for the entire public school system budget.
Property taxes cover about 40 per cent of the system's operating costs, so taxpayers are being left to cover the remaining 2.5 per cent increase in expenses.
Maintaining the status quo without cuts to spending would require school property taxes to go up about seven per cent.