27
Jun
MPAC
Recently I received a letter from a resident in regards to their new MPAC assessment;
"I am sure I am wasting my time, however,, the jump in property taxes is really quite awful...It's all right saying your property is worth so much, but, we have to live here...I am a pensioner and have lived here for over 28 years..... I am a senior...Where do seniors, disabled and folk on fixed income come up with the thousands of dollars,over the next few years, this increase will cause...There have been thousands of homes built in Stouffville, over the past 10 years, so the property tax money coming in must be huge...I feel we are being gouged, and, feel like moving out of Stouffville, due to taxing like this...These are just property taxes to you, but, these are our homes...People with kids,one income, and the elderly will be greatly impacted by this assessment...Please see if you have time on your agenda to deal with this issue..Either reduce the assessment or the mill rate.This rate of property inflation cannot be sustained forever...There must be another solution...Thank you..."
Here is my reply:
Hello,
First and foremost, please allow me to assure you that a question to your councilor is never a waste of time. I endeavor to answer all queries as soon and as succinctly as possible, given that at times the answers to seemingly simple questions are often quite complex. Your question is one such as those, and I will try to explain as best as I can.
The MPAC assessment you received, although quite shocking based on percentages alone, is not entirely reflective of how your property taxes will be affected.
MPAC is simply a provincial agency that makes a determination of property values and other information, with which municipalities use in various decision making processes, including the creation of mill rates for each class of property uses in the jurisdiction.
And because your assessment shows a particular percentage increase, it does not mean your taxes will go up the same rate.
To understand that, we need to look at how municipalities are required (by provincial legislation) to set tax (or mill) rates to fund their operations.
For the purposes of this discussion we will set aside other incomes such as user fees, development charges and other dedicated charges which are cost recovery based.
Municipalities begin the process by first creating a budget to determine what it will cost to fund operations for a given fiscal year. When that number is established, they then go about setting a revenue strategy.
As an example, lets say that our municipality has budgeted expenses for the upcoming fiscal year of $500,000
Lets then assume you are one of a total of 100 property owners in the municipality who have a combined property assessment of $10,000,000
The mill rate would then have to be 0.05
If then the MPAC assessment were to increase by 10%, the total value of those 100 properties would then be $11,000,000. But the municipality would only be able to by law collect it's budgeted requirement of $500,000, the mill rate would then drop to 0.045.
Small consolation I know, you would be paying the same amount in taxes, even though your MPAC assessment increased.
If on the other hand, the budgeted requirement went up to say $550,000, then based on the $11,000,000 in total property value,the mill rate would increase to 0.05. Which is where we started.
So in an effort to reduce the tax burden for residents the municipality has to try to reduce budget expenditures. This is always a challenge for all municipalities, and a very difficult one, as the cost of everything keeps going up. From wages to materials, to outside services/contractors we must use, everything gets more expensive all the time, as you well know.
The other option we have is to increase the total assessed value in the town to which we can spread the budgeted costs. We do this by growth.
If the original 100 property owners in our example whose properties had a combined value of $11,000,000 (an average value of $110,000 each) were joined by 10 more new owners, for a total of 110 owners and a total value of $12,100,000, the mill rate would then drop to 0.045, and since your individual assessed value did not change, your taxes would actually go down.
Of course this is a very simplified explanation, but it shows that the MPAC number should not as much a concern as many make it out to be.
We use it to ensure some semblance of fairness in what we charge our ratepayers. It seems reasonable at first glance that more valuable properties should pay more, but in the case of seniors on fixed incomes this can be difficult. The upside we are told, is that when your property is sold, you will reap the benefits of the increased value. But again, this is small consolation if you are planning to stay in your home.
Even though we as council and staff have no control over property values and the like, we are able to hold the line as best we can on our expenditures, to reduce the impact on our residents. And residents have every right to be concerned about how we control our expenses while still at the same time provide the ever increasing level of services that they are demanding of the the town. And we are trying our best to provide that balance.
I know you expect no less of us.
For more information, go to the MPAC site
here
And as always, for more information about this or any other issue, please contact me 647-542-4154 or the other links on the home page.
Thanks.
