Education tax to be reformed, easing rates for Calgary

The Redford government is restoring the link between education property tax and actual school spending, as part of a major provincial property tax reform that will ease rates for Calgary this year but pinch homeowners in many smaller communities.

The new budget policy that means property tax will cover 32 per cent of the Education ministry’s operating budget could theoretically deliver a property tax hike for all Albertans in future years, if school spending continues to rise.

But this year, the average Calgary homeowner will pay $40 less in provincial property tax. That’s because the province announced plans to end a “mitigation formula” that sheltered properties in some rapid-growth towns from sharp jumps in assessment and taxes, at the expense of other cities and towns.

A homeowner in Chestermere, one of the most protected communities under the mitigation program, paid $770 in provincial property tax on her $485,000 home, according to Alberta Municipal Affairs. The owner of a $448,000 home in Calgary paid $1,212.

By scrapping the mitigation formula, homes of equal value will pay equal taxes. But the municipalities where the impact of this change will be most harsh – Chestermere, the Fort McMurray region, Banff and Waterton – will have their buffers gradually phased out over two to three years.

While the province is taking less from Calgary property taxpayers this year, it’s unlikely that will actually reach their wallets. Thanks to a policy that Mayor Naheed Nenshi and city council enacted, the city absorbs any “tax room” – the gap between the rate of city’s own property tax increase and the education portion – and uses whatever millions of dollars in extra tax money that creates to fund parks, recreation facilities or fire halls and equipment.

Education property taxes were connected to actual school budgets back in the early 1990s, when school boards controlled that tax rate. But when the province took over the education property tax system, the money was put into general Alberta government revenue, disconnected from actual education spending.