Tax relief is coming to St. Albert in the form of a new policy approved by city council Monday night, but it will likely take years before residential taxpayers see any significant benefit.
Council unanimously approved its taxation policy that will provide relief to residential taxpayers in years of high non-residential growth but will also lock in residential increases to a minimum in years where residential growth exceeds non-residential.
Referred to as "migration and lock," the goal is to transfer more of the onus for the city's tax burden to the non-residential class without adopting a split taxation rate between the two classes. Tax burden is the relative amount of taxes levied on both classes, in St. Albert's case as 82.9 per cent for residential and 17.1 per cent for non-residential. In essence, when the city decides on how much money it needs for any given year's budget, 82.9 per cent of that total comes from residential and 17.1 per cent from non-residential.
Under the new policy adopted by council, the tax burden would be allowed to passively migrate to benefit the residential class. In years when non-residential growth exceeds residential growth, the residential tax burden would improve slightly, leading to equal tax increases in that year. In years where non-residential growth did not exceed residential, the tax burden would be "locked" at the previous year's percentage, meaning non-residential will pay a higher tax rate than residential.
"We are highly taxed as far as residential is concerned and we need to bring in new business and transfer taxes over to business," said Mayor Nolan Crouse. "We hope over a period of years to slowly nudge the percentage so we are more reliant on business."
But any such nudge could take as long as a decade to offer significant tax relief to the residential class.
"Over a period of time there would be downward pressure on the residential tax base with growth of the non-residential," said acting city manager Chris Jardine.
As an example, if assessment within St. Albert continued to grow at historical rates of 2.9 per cent for residential and 3.95 per cent for non-residential per year, by 2020 the tax burden improvement in the residential class would be three per cent.
Passive taxation
The new policy approved by council represents its first actual policy on taxation, compared to years past. Its passive approach, in part, was a contributing factor in St. Albert's high tax rates, along with other factors such as lack of non-residential growth, economies of scale and not pursuing other revenue sources like franchise fees.
"We didn't have a policy," Crouse said. "All we had was our staff in a closed room trying to figure out the right balance and bringing it forward to council.
"Our staff have a role not to play politics — that's our job — and this was pushing them into doing something."
The policy also reinforces the city's commitment to revenue neutrality, or that its revenues do not increase automatically with increases in market assessment.
The "migrate and lock" option was one of three presented to council Monday. The first option would have seen no change and continued the practice of increasing residential tax burden to make up for shortfalls in non-residential. The third option, considered more aggressive, involved directly slashing the residential tax burden over time, leading to split tax rates for residential and non-residential classes. But administration might still require direction from council to set the actual tax burden, as opposed to option two, which makes the practice an administrative function.
"I think that council has got a commitment to make sure non-residential development and businesses are paying a fair share in our community for doing business," Crouse said. "It's really transferring some of the burden."
