Alberta budget blamed for Edmontonians getting hit with higher property taxes

Changes in the provincial government’s recent budget means property owners will be saddled with a much larger property tax bill than they first anticipated.

But province says increase in education taxes driven by higher costs

Residential property owners in Edmonton will pay 4.9 per cent more in property taxes in 2016, following last Thursday's provincial budget (Jonathan Hayward/Canadian Press)

Changes in the Alberta government's recent budget mean Edmontonians will be saddled with a much larger property tax bill than first anticipated.

Edmonton city councillors say they are angry the province continues to download the responsibility of collecting the education portion of property taxes onto the city on the government's behalf, particularly when they increase. 

Councillors said Tuesday they worked hard to whittle down this year's tax increase as much as possible. Last December, after a month of debate, they approved a 3.4 per cent increase for 2016.

But on Monday, council learned the NDP government has budgeted for a $158 million increase in education tax revenue. That will mean an 8.7 per cent education tax increase for residents in Edmonton.

Combined with the municipal property tax, the final property tax bill for the typical homeowner will be 4.9 per cent higher than last year, 1.5 percentage points higher than previously estimated.

Overall, that will mean the typical homeowner will pay roughly $109 more in 2016, though the final numbers have not been confirmed yet.

According to the province's budget documents released last Thursday, the increase is driven by higher education costs, 32 per cent of which are funded through property taxes. 

The city collects the education tax on behalf of the province and passes the money on. But Coun. Michael Oshry said many people don't realize the tax hike isn't set by the city.

'People end up furious at us'

"It's actually awful," fumed Oshry. "The province doesn't publicize that it's the one making these decisions, we have to collect the money and we get the phone calls."

Oshry said the province is raising taxes in an "underhanded" way and the city takes the blame.

Mayor Don Iveson said it's "extremely irritating" to have to explain to residents that their property tax is going up more because of a decision by the province.

"It's really difficult for people to understand, so people end up being furious at us," Iveson said.

It's actually awful- Coun. Michael Oshry

The mayor said he planned to raise the issue as part of city charter negotiations with the province.

"If anyone has an issue with the education property tax they should talk to their MLA," Iveson said.

Education Minister David Eggen said he thinks most people in the province agree that education must be fully funded.

"It's important for us to have stable funding for education in order to meet the needs of our growing enrolment, with more children in the classrooms," Eggen said.

He said the education tax rate hasn't changed.

Province also cut municipal grants

As part of their efforts to reduce the overall property tax, council initially suspended levy increases for neighbourhood renewal, and filled the gap with infrastructure grants from the province.

The province in its fall budget promised Edmonton $20 million more for municipal infrastructure projects in the form of Municipal Sustainability Initiative grants. But the budget released Thursday cut MSI grants overall by $50 million, reneging on the promise for the capital.

On Tuesday, city councillors had hoped to lower the municipal property tax portion from 3.4 per cent to 2.8 per cent, using some extra money from property assessments and savings from the Valley LRT line project, which came in under budget.

However, rather than reduce property taxes, councillors instead decided to put the savings toward covering the municipal grants that were revoked by the province, leaving some councillors disappointed.

"We budgeted and planned for it," said Coun. Andrew Knack, referring to the infrastructure grants.

Oshry was the only councillor present Tuesday who voted against the plan. He said while infrastructure grants were taken away, the province did allocate more money for affordable housing and green initiatives.

He said the city should have found the money to cover the grants from elsewhere in its own budget, and lowered the overall tax increase.

"We can't just keep adding and adding and adding when things don't go well," Oshry said.