Motkaluk plans to reform ‘smoke-and-mirrors’ property tax system, cap annual hikes to 1.16%

Hey there, time traveller!
This article was published 11/10/2018 (2522 days ago), so information in it may no longer be current.

Winnipeg mayoral candidate Jenny Motkaluk is promising to cap annual property tax increases to owner-occupied homes to 1.16 per cent by simplifying how the tax bill is calculated.

However, a lawyer who is credited with a series of court challenges against city hall in the 1980s that led to the reform of the property assessment system, says he questions whether Motkaluk understands the process.

Motkaluk told reporters Thursday the method of determining property taxes is confusing and convoluted, and penalizes those who improve their homes with property tax increases.

“I say we can fix it, and it won’t require the smoke-and-mirrors approach that we have right now, because in fact (my solution) is very simple,” Motkaluk said, adding under her plan homeowners will not be penalized with higher tax bills should they improve or enlarge their homes.

“Even if you painted (your home) with gold and put in all kinds of granite and marble,” property tax bills won’t increase.

Lawyer Michael Mercury, who took city hall to the Supreme Court in 1983 and won a case that resulted in the city issuing $10 million in property tax refunds, said it is an empty promise.

“Your property taxes are based on the value of your property,” said Mercury, who is semi-retired. “What she’s proposing is highly discriminatory, extremely confusing, totally illegal — and you would need a crazy legislature in the province of Manitoba to ever think of enacting such bizarre legislation.

“The Supreme Court said you can’t freeze the assessment process, and the city ended up refunding $10 million,” he said. “You can’t fool around with that stuff. The city tried before, and they messed things up and they paid dearly for it.”

By law, city hall is required to reassess the value of each property every two years, and use that value to set the owner’s individual property tax bill.

Currently, city council approves a property tax increase that is applied to individual properties, depending on the assessed value of each property and using a formula that takes the council-approved mill rate and multiplies that figure against a portion of the property’s assessed value.

The province sets the portioning rate: 45 per cent for all residential properties, including rentals; 65 per cent for commercial properties.

As property values are reassessed every two years, individual property tax increases don’t necessarily reflect the increase approved by council — they can be higher or lower, or, in some cases, they could be decreased.

“The calculation of property taxes remains complicated because we are required to use the reassessment (data),” Motkaluk said, adding her alternative method will eliminate the complication brought on by changing assessed values. “Regardless of (any change in assessment), we are still going to only increase your taxes by 1.16 per cent.”

Motkaluk said her plan will effectively freeze the current assessed value for all owner-occupied homes indefinitely, and then apply individual calculations to each of those properties to ensure the tax bill is 1.16 per cent higher than the year before. Only when a home is sold, she said, will the tax bill be adjusted to reflect the sale price.

She conceded her method will require the city assessment department to track individual sales of all owner-occupied homes, using the sale price to set a baseline value for the property tax formula for the new homeowner.

While introducing a new calculation method for owner-occupied homes, Motkaluk said all other classes of property — commercial, industrial, rental homes — will continue to be taxed under the existing method, but with the proviso the overall property tax increase will still be limited to a 1.16 per cent cap.

As a former member of the Board of Revision, the arm’s-length group that adjudicates property assessments, she said she understands homeowners’ frustrations with the current property tax system.

Motkaluk said she spent the past six months reviewing and honing her proposal and subjecting it to expert scrutiny. She’s confident it will only require council passing a bylaw to withstand any legal challenge.

The proposal would also eliminate millions of dollars from the assessment department budget, she said, which is taken up fighting property assessment appeals.

Motkaluk said her pledge for an overall property tax increase of 1.16 per cent is half of what incumbent Brian Bowman says he will do if re-elected Oct. 24, adding she believes her tax increase will generate more than enough revenue to keep all civic services.

Bowman said Thursday he didn’t really understand Motkaluk’s tax reform proposal, and questioned whether it was legal and if there would be enough time to implement it before the new council is required to pass a budget (before the end of March).

“I don’t believe the plan is credible, and it’s risky,” Bowman said, adding an overall property tax increase of 1.16 per cent will not generate enough revenue for the city to maintain its current road-renewal target and existing services — and pay for Motkaluk’s campaign promises, that so far total more than $1.2 billion.

aldo.santin@freepress.mb.ca