The setting of annual property tax rates by local governments is a long, relatively prescribed, process that begins after council has made decisions that affect the upcoming year’s budget.
The decisions fall into two main categories: operational and capital – maintaining the levels of service to which residents are accustomed (operational) and deciding which capital projects are to be undertaken.
Of course, it’s not quite that straightforward.
The primary consideration operationally is to maintain or improve levels of service and everything that entails. What dollars go into providing an expected level of service at Dale Meadows Park, for example? Maintaining the sports fields, marking lines on soccer fields, leveling ball diamonds, maintaining planted areas, maintaining lighting, opening/closing access gates, maintaining parking areas, enforcing bylaws, scheduling regular use and special events.
Contractual pay increases for the RCMP and unionized staff, also add to operational costs.
On capital projects, different considerations come into play. Let’s use the example of the Giants Head Road project.
This project includes reconstructing the roadway reconstruction and pathway/shoulder bike lanes, improving drainage, replacing the under roadway water main, and installing the infrastructure for the future separation of the treated water from irrigation water.
To apply for grant funding, the project had to be ready to begin construction. The design work was completed in 2020.
Unfortunately, the district was not successful in receiving grant funding for the project and it was set aside. However, council determined the project was still a priority. Council conducted an Alternative Approval Process to hear from electors on borrowing the funds (not more than $6,464,500) over a 25-year period. Summerland voters chose to have the project proceed and it will be substantially completed this fall.
It is the determination of the costs of operations and capital projects that provides the basis for the tax rate calculation. Revenues are also primarily generated through user fees and rentals, development cost charges and sales of district-owned land.
Because local governments are required to submit a balanced budget to the province, when the amount required is greater than forecasted revenues, we see a property tax increase. This year, budget decisions showed a deficit of $381,300; each one per cent of tax brings in $95,325 in revenue, meaning a four per cent property tax increase for 2022. Again, it’s not quite that straightforward.
Each year, the province, through the BC Assessment Authority, assesses and categorizes properties into one or more classes.
A common misconception is that a significant change in your assessed property value will result in a proportionately significant change in your property taxes.
This is not necessarily correct. The most important factor is not how much your assessed value has changed, but how your assessed value has changed relative to the average change for your property class in your municipality or taxing jurisdiction.
Summerland’s four per cent property tax increase is in line with most municipalities in the Okanagan and lower than others.
School taxes and Regional District of Okanagan-Similkameen taxes are also assessed on property owners and appear on the District of Summerland property tax notices.
Taxes are due on Monday, July 4. After that date a 10 per cent penalty applies. Payment may be made in person at municipal hall or at your banking institution or online through online banking. You must claim your Homeowner Grant through the province no later than July 4.
Toni Boot is the mayor of Summerland.
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