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School tax freeze is a numbers game

Complex formula means many will pay more

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The provincial government is allowing school divisions to raise education property taxes while claiming a tax freeze.

The Selinger government is letting divisions increase the money collected through property taxes at a rate based on an estimate of how many new properties will pay taxes for the first time in 2010 and what those properties will be worth.

That means the average house in Pembina Trails School Division will pay another $33 in school property taxes this year -- even though the division accepted the provincial tax incentive grant (TIG) by agreeing to freeze taxes.


Brace yourself -- the explanation can be as confusing, complex and convoluted as the bizarre provincial education funding formula.

"You run the risk of creating more confusion than in illuminating and illustrating," said PTSD secretary-treasurer Craig Stahlke, whose division chose to announce the apparent contradiction publicly. "TIG does permit an increase. You are permitted a tax increase while taking TIG.

"We tried to be as straightforward as we could. We don't want to bury our increase and pawn it off as reassessment," Stahlke said.

This is the third year for TIG. Divisions that accepted TIG agreed to freeze mill rates.

But reassessment altered mill rates radically and made a straightforward freeze impossible. Mill rates are the property taxes collected divided by the assessment base, and the assessment base is now 73 per cent bigger -- so mill rates are smaller.

Stahlke said the province is allowing divisions that freeze taxes to still increase the amount collected this year through education property taxes by the average increase in their assessment base from 2006 through 2009 -- new growth represented by newly taxed properties in that period.

In Pembina Trails, that's 1.9 per cent, and that's $33 on a typical house, he said.

The province says the flexibility to increase 'frozen' taxes is based on an estimate of new growth this year. No one will know until the end of December how many properties will start paying taxes this year, when they'll start paying, or what the properties will be worth.

"The tax incentive grant was (previously) based on freezing mill rates," said Lynne Mavin, assistant director of the finance branch of the department of education.

"We've based the levy on 2009 (property taxes) plus an amount estimated on new property. We don't know for sure how much new property is worth in 2010."

Louis Riel S.D. superintendent Terry Borys said his division was allowed to increase the money collected through property taxes by 3.1 per cent, while accepting the TIG.

Winnipeg S.D. took the TIG, but says it was still able to balance everything without any increase. Five city school divisions have accepted TIG, leaving only St. James-Assiniboia School Division to raise taxes 3.72 per cent.

The bottom line?

It's complicated

Here are the mill rates that school divisions supplied to city hall by the March 15 deadline:

Seven Oaks 17.2

Winnipeg 17.2

River East Transcona 15.626

Louis Riel 14.193

Pembina Trails 14.173

St. James-Assiniboia 14.084

Will you pay more school property taxes this year?

We have a clear, definitive answer for you: it depends.

First, all properties in Manitoba have been reassessed at their market value as of April 2008. The average increase in value is 73 per cent -- that's average, remember, it's different from division to division, and different from street to street.

Second, the values of homes have shot up far higher and faster on average -- that word again -- than have the values of offices, factories and stores. The result is that some of business's share of the tax burden will shift onto homeowners.

In Pembina Trails School Division, for example, that means $46 shifting from business owners to a typical homeowner.

Even with a freeze, your home's value determines your taxes.

Generally, if your home has increased in value more than 73 per cent, you're probably carrying a greater share of the tax burden, and you'll get a higher tax bill.

If your home has increased in value less than 73 per cent, then you'll carry a smaller share of the tax burden, and you'll get a lower bill.

So how do you find out, without waiting until your tax bill arrives in the mail?

First, get out last year's bill and look at how much tax you were billed, deduct the $650 provincial education property tax credit, and save that number.

Now, you need to do some math.

Homes are taxed at 45 per cent of the assessed value, business at 65 per cent, don't worry about farmland right now, it's complicated enough. This is called portioning.

Take the assessed value of your home, multiply by 0.45, then multiply by the division's mill rate, divide by 1,000, and you'll have your education property tax bill. Then deduct the $650 education property tax credit.

So, say you live in Winnipeg School Division and your home is now assessed at $150,000.

Multiply $150,000 by 0.45, multiply by 17.2 mills, divide by 1,000, and you get $1,161. Deduct the $650, you pay $511. Now compare that number with last year's.

Really simple, eh?

Republished from the Winnipeg Free Press print edition March 24, 2010 B3

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