December 6, 2019

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Why your school taxes are going up Chapter 1

People often ask why in the world Manitoba would tie the quality of a public education to property taxes, but it’s even more bizarre than that.

At the heart of a school division’s ability to provide a quality education is the assessed value of properties within a division.

Especially commercial assessment.

The province’s complex, confusing, and convoluted funding formula allows school divisions to keep every penny of commercial propety taxes within that division, even if that property doesn’t add a single child to the schools within the division, and even though people from outside that division work or shop at those properties.

Commercial properties are taxed at 65 per cent of their assessed value, homes at 45 per cent of their assessed value. And commercial properties still pay the education support levy, which the NDP phased out for residential properties last decade.

The greater the assessed value of commercial properties within a division, the less of a burden there is on homeowners to carry the cost of education.

That’s why a home of identically-assessed value pays hundreds of dollars more in property taxes in Seven Oaks, which has a small commercial property base, than in St. James-Assiniboia, which has more than four times as much in commercial assessment than does Seven Oaks.

Commercial properties are concentrated in barely a third of the school divisions in Manitoba, but those fortunate divisions, and more importantly the province, have resisted any efforts to throw all commercial taxes into a pot to be shared equitably.

Pembina Trails is second only to Gimli-based Evergreen in the rather arcane statistical category of assessed property value per student. Yet Pembina Trails is reaping the whirlwind of the property taxes from not only IKEA, but all the other businesses that will be built on that enormous retail property.

Still with me? Can the always-outraged people at the Manitoba chapter of the Canadian Taxpayers Federation keep their eyes from glazing over?

But having created such a bizarre system to finance public education, the province then pulls the rugs out from under some school divisions.

The ultra-mega-project CentrePort will not add a penny to the treasury at Interlake School Division, although a big chunk of it will sit within the R.M. of Rosser, school board chair Fran Frederickson lamented from Stonewall.

"The province passed legislation in 2008," Frederickson said. To lure development, businesses will get a huge break on their taxes.

"The school division will retain the taxes on the pre-development value of the land. Presently, it’s farmland," taxed at a lower rate than business, valued substantially lowered than business.

The first phase that could be developed within the division would soar from an assessed value of $125,000 to an assessed value of $3.96 million, yet the property tax bill wouldn’t change, said Frederickson.

Winnipeg School Division deputy chair Mark Wasyliw said in a recent article that some of the major downtown construction projects received a 20-year property tax deferment as an incentive to build — thus denying both the city and the school division whopping taxes.

Then take a look at the Canadian Museum for Human Rights.

Deputy city assessor Mel Chambers says the $351 million project’s true assessed value will not be known until at least 2014, when it’s scheduled to be fully open.

But its most-recent assessed value was $35.4 million as a partially-completed building on valuable land, WSD’s commercial property taxes from the museum would be $254,718 along with $190,013 in education support levy.

That much money would pay wages and benefits for more than seven teachers.

And Chambers speculated that when it’s fully up and running, the museum’s bill for school taxes would be well north of $1 million annually.

But as my colleague Bartley Kives reported last month, Ottawa, as the property owner, is still dickering over what the feds would pay as a grant in lieu of taxes, since Ottawa does not pay municipal taxes on federal land. Bartley’s story cited a source who said Ottawa is proposing to pay $1 a year.

It was not clear if the city and the school division would each get a dollar, or have to split a loonie.


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