NOW THEREFORE BE IT RESOLVED THAT the Alberta Urban Municipalities Association advocate for the re-establishment of the Educational Requisition Cap at 8% or the elimination of the Education Requisition via municipalities.
WHEREAS the collection of Education Property Tax via the municipalities has a profound effect on member municipalities and ultimately the individual tax payer;
WHEREAS the Province of Alberta utilizes Alberta municipalities to collect Education Requisition on their behalf to support educational requirements through the Alberta School Foundation fund;
WHEREAS the Province of Alberta has been steadily increasing the amount of Education Requisition since 2005/2006;
WHEREAS in 2005/2006, the Education Requisition was capped at 8% and has been steadily increasing each year since the removal of the cap in 2013.
Each municipality’s share of the provincial education requisition is determined by applying the provincial uniform tax rates to the municipality’s current equalized assessments. Municipalities collect local education property taxes from property owners to pay the requisitions. Properties of similar value and property type across the province pay similar amounts of education property taxes. The 2016 uniform tax rates are $2.48 per $1,000 of equalized assessment for residential and farmland property and $3.64 per $1,000 of equalized assessment for non-residential property;
To ensure that communities are affordable and viable, municipal tax collections should be cognisant of economic conditions facing many Alberta residents. Member municipalities are also facing increased operation costs due to climbing utilities charges, limited tax base, and overall increased operations. With a -2 to 21 percent increase in total education requisition, municipalities have limited options on where additional revenue sources could be obtained; options included increasing taxation and/or increasing borrowing, or reducing much needed programs and services.
This year alone, member municipalities took a hit to their bottom line, losing assessment and subsequently dollars when the Grant in Place of Taxes was removed from municipal funding formulas. This resolution regarding resolutions has already been addressed through AUMA board of directors and voted upon by the membership. Alberta Treasury Branches are exempt from paying the educational requisition, therefore cumulatively reducing funds of each community in Alberta.
It is understandable that the province needs a vehicle to collect sources of funding for education; it should not be on the backs of the member municipalities.
The Minister stated that the Government of Alberta will continue to collect education property tax from municipalities that are already collecting from their ratepayers, and removing education tax is not
something that government is considering as it provides funds required for operating the provincial education system.
In terms of the education requisition cap, the response explains the mitigation formula that was used prior to 2013 to calculate municipalities’ share of the provincial education property tax requisition. The Minister suggests that the former mitigation formula was eliminated because it sheltered high-growth municipalities from experiencing rapid requisition increases, but shifted the tax burden to lower-growth municipalities.
AUMA "rejects" this response for the following reasons:
The Minister’s response makes it clear that the province is not contemplating removing the education property tax requisition. Further, although the province provides a reasonable explanation of the history of the 8 per cent cap, the mitigation formula, and why it was discontinued -- there is no intention to address the concern about having sufficient tax room for municipalities to draw the necessary revenues from the property tax base in order to contribute to the investment in local infrastructure.
AUMA included an update on the education requisition in our analysis of the 2018 Provincial Budget: Between 2008 and 2016, the province increased education property taxes by an average of 6.5 per cent per year. This was partly driven by the government’s policy in 2013 to link the amount of education property tax to be fixed at 32 per cent of provincial education operating costs.
In 2017, the province chose to freeze revenue from the education property tax and AUMA is pleased that Budget 2018 will keep the education property tax at the 2017 level, which will fund approximately 31 per cent of the education operating costs.
Although the revenue level was frozen in the fiscal year, it will result in an increase on the calendar year and an increase in mill rates in order to raise the same revenue. The residential/ farmland rate will increase from $2.48 to $2.56 per $1,000 of equalized assessment. The non‑residential rate will increase to $3.76 from $3.64 per $1,000 of equalized assessment.