It has been pointed out to me that I incorrectly interchanged the words tax levy and tax rate in my recent post under Item 9.3.2. The corrected text is provided below.
If the Town levy is $15 million (for example) and the 2017 levy increase is 2%, then the total levy will be $15.3 million, regardless of any assessment changes. But your tax rate may be going up by 7%, 2% for the levy increase and 5% for the drop in the assessed value of your property (if that is the case for your property). In theory you should see your taxes only go up 2%, not the 7% of your tax rate increase. If however, your assessment went up 2% it is likely that your taxes will go up 2.5% (2% levy increase, plus a phased in assessment increase of about 0.5%), assuming that the Town is able and willing to segregate the assessment changes and apply them individually. I guess this shouldn’t be a problem as the drop in assessment for most properties was based on property class, i.e., residential, or multi-residential, or farm or commercial, etc. But a few property taxes may still be screwed up with the assessment value changes, and cases could fall ‘between the cracks’. I suspect that it will mean a bunch of work for the Finance Department and a new set of property class tax rates.
Although the Town may prefer to use the concept of levy and levy increase rather than tax rate and tax rate increase, it will still need to tax properties using a tax rate. I suspect that since assessments in Parry Sound dropped more than our neighbours the difference in tax rates will be even greater.
Corrected version with the earlier text crossed out and added text underlined.
9.3.2 – Revision to the Budget and Financial Controls Policy. Resolution. That Council hereby approves the Budget and Financial Controls Policy, attached as Schedule A, for the Corporation of the Town of Parry Sound; and Further that Council rescind Resolution 2015-139.
This is a big issue, with a rather mundane title. The net/net is that with the new property assessments the Town will lose about 5% of its tax revenues due to lower assessments on the existing properties if it uses the existing tax rates. There is interest in recasting the concept of taxes from a municipal tax
levy rate to a municipal tax rate levy. To recoup the loss of revenue from the reassessment the Town will need to raise the tax levy rate by 5%, but the tax rate levy would stay the same. Get it? It’s not really smoke and mirrors, it’s trying to manage the optics of a situation. There will be any number of issues related to the revised property assessments. This Resolution seemingly attempts to change little in terms of overall financial costs to the town residents but make the make the process a little more palatable. “Town of Parry Sound intends to raise tax levy rate 5%. Residents freak, Stay tuned.” Much ado about not much.
I apologize for the confusion. Nothing is really changing, it’s how it’s being spun. But your taxes will be going up in 2017, but probably not as much as your tax rate would suggest.