City Council has reduced the amount of the 2015 residential property tax increase by not using the full “education tax room” available, an option caused by the provincial education tax increasing less than the municipal portion of the residential property tax bill.
For homeowners, the average total property tax bill will increase by 2.4%, while non-residential properties will see the tax bill increase by an average of 7.6% — for a combined residential and non-residential increase of roughly 3.3%.
What is the education tax room?
For residential properties, about 30% of all property taxes collected by the City go to the Government of Alberta to help pay for education, while the remaining 70% funds civic services in Edmonton.
Education tax room occurs when the provincial education tax increase (set March 26 in the Provincial Budget) is less than the percentage increase in the municipal portion (set in the December City Budget discussions).
In December, City Council set the municipal tax increase at 5.7%. The education tax did not increase as much for residential properties, leaving City Council with the option of raising the municipal portion so that the total property tax bill could remain at the 5.7% increase. This would have increased City revenue by about $32 million.
Council decides not to use full tax room
City Council decided not to collect the full $32 million in taxes, instead collecting only the amount of taxes needed to pay for civic services. About $2 million of the education tax room will be used to cover extra costs that have been identified since the December Budget, including additional peace officers for transit, and to support the public library.
The March Provincial Budget cut $6.7 million in grants that support social housing in Edmonton. However, higher than expected growth in new taxable properties helped partially offset that drop in revenue in Edmonton. The portion of education tax room used covered the remainder.
Impact on a typical home
For the typical house valued at $401,000 — that experienced an increase in assessed value by the City average — the tax increase amounts to about $5 per month. The total bill would amount to about $3,100 per year, which is be made up of almost $900 for the education tax and about $2,200 for the municipal tax.
For non-residential properties, the total property tax bill will increase by an average of 7.6%.
When the City will finalizes the tax rate in late April, Council will set exact tax rates for all property classes. The tax notices are mailed to all properties in May.