Winnipeg Free Press - PRINT EDITION

Municipalities skim education taxes

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BRANDON -- Millions of dollars earmarked for children's education are being diverted to municipal coffers each year because of an ambiguity in provincial laws the Selinger government is in no hurry to fix.

Each year, residential and commercial property owners receive a property tax bill from the city, town or municipality their property is located in. Those bills are composed of the taxes levied by their municipal government and local school division. In the case of commercial properties, there is also a provincial education levy.

When those taxes are received by a municipality, it forwards the school tax portion to the relevant school division and the provincial education levy to the government of Manitoba.

Municipalities also send supplementary tax bills during the year for properties that were not assessed or have undergone changes that have increased the value of those properties. For example, through new construction, renovation or subdivision.

Supplementary tax bills are made up of both municipal and education taxes, at the same total mill rate as the "regular" tax bills.

Unlike regular tax bills, however, none of the monies paid in respect of supplementary tax bills is being remitted by municipalities to school divisions.

"In the case of spring and fall supplementary taxes, all of the monies remitted to the city remain with the city", says City of Brandon spokeswoman Allison Collins. "There is no obligation for us to remit supplementary tax revenues to the school division or the province."

The same approach is followed by the City of Winnipeg and most, if not all, municipalities in the province. They rely on an ambiguity in provincial law, which allows municipalities to issue supplementary tax bills, but does not specify what they must do with the money.

That ambiguity may amount to more than $1 million in lost annual revenue for the Brandon School Division over the past decade.

On a province-wide basis, monies not remitted to school divisions could amount to tens of millions of dollars each year -- a windfall for municipalities, but a kick in the shins for a cash-strapped education system.

While it is surprising millions of dollars could annually be diverted to municipalities in this manner, it is even more remarkable officials at every level of Manitoba's education system appear to have been oblivious to the fact it was occurring.

Upon learning of it, Brandon school board chair Mark Sefton responded "Although some of the taxes collected are clearly identified by the municipalities as education taxes, these funds are not forwarded to school divisions to support educational programming. If property owners are being told that a portion of their taxes are designated to support education, then those funds should be forwarded to the respective school divisions."

Selinger government spokesman Jean-Marc Prevost dismisses those concerns, saying "School division funding was designed to streamline the process for property owners by having a single tax bill. Under the arrangement a school division does not get partial year supplementary tax -- and does not lose revenue from uncollected tax or pay back tax when assessments are reduced on appeals.

"Municipalities also do all the tax administration on behalf of school divisions. Historically this has resulted in a fair arrangement and few divisions have raised concerns."

The arguments municipalities should get to keep the money because of administrative costs associated with sending out the bills, and the risk of refunds caused by assessment appeals, are unconvincing.

There is no extra cost associated with tax bills that are going to be mailed by municipalities in any event.

Beyond that, the two-year assessment cycle has resulted in far fewer successful appeals, and school divisions can create reserves for potential tax refunds.

As to the argument this is a "fair arrangement and few divisions have raised concerns", how can it be "fair" that millions of dollars designated for education are being diverted to municipalities each year?

How can school divisions be expected to raise concerns about an arrangement they did not know about, and never consented to?

Sefton is right. Money earmarked for education should fund education, not municipal slush funds. It is surprising the NDP government, which claims to be on the side of teachers and students, apparently disagrees.

 

Deveryn Ross is a political commentator living in Brandon.

deverynrossletters@gmail.com

Republished from the Winnipeg Free Press print edition January 31, 2014 A9

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