Home and business owners will be paying more property taxes this year but Humboldt City Council has done its best to minimize the rising costs.
Council finalized and approved the 2013 municipal budget on April 18.
After months of deliberation and discussion, council has balanced the 2013 budget, achieving a surplus of $125,472 (including Water and Sewer and Land Development) with a slight cushion for reassessment challenges.
The overall financial position for the City of Humboldt is $14,968,820 in revenues (long-term debt, reserve transfers) and $14,843,348 in expenses (long-term debt payments and reserve transfer).
The greatest issue of contention for this year's municipal budget was the residential property tax and residential base tax.
"Nobody likes new taxes," Mayor Malcolm Eaton said during the budget meeting. "But we also hear the conversation that we need to fix these roads, we need to fix those water lines and if we don't do it now it's going to be more expensive later.
"At the end of the day we want to make a decision that is fairest to all," Eaton continued.
Because this year was a reassessment year, the lower-appraised properties were reassessed to reflect fair market value, resulting in a high tax increase for many homeowners this year, explained Steve Brown, director of Finance for the City of Humboldt.
"Either way you slice it, the reassessment this year has caught those properties and has brought them up substantially," said Brown.
Approximately 313 residential properties have been identified as the hardest-hit because their 2013 assessments total less than $70,000. Property taxes of these lower assessed homes (under $70K) went up drastically while mid-assessed homes (20-30 years old) increased minimally and newer constructed houses, for the most part, remained consistent with last year or saw a slight decrease.
Brown told council that the increased assessment is in fact a positive factor for the City of Humboldt as it indicates a strong and prosperous economy.
"The assessment is equivalent of the GDP (gross domestic product) of the local economy so an increased assessment is a sign of a healthy economy," he said.
Because some of the lower-assessed residential properties in Humboldt have seen their assessed values go up as much as 200 per cent, council struggled with the proposed residential base tax increase from $495 to $525.
As an example, a property that was assessed at $17,200 in 2012 is now valued at $51,800 in 2013, for a 198 per cent increase. If the proposed increase to the base tax was enacted it would translate to an additional $18 increase in property taxes for this year.
"Because of assessment, homeowners are getting hit pretty heavy already so why do we need to (increase) the base tax?" Coun. Leon Fleischhacker challenged council. "Maybe this year we shouldn't increase it."
And so, after much deliberation, Council voted to leave the residential base tax unchanged for 2013.
Brown told Council there would be opportunity to increase the residential base tax next year in efforts to gradually reduce the gap between low- and high-valued properties.
While the residential base tax will remain at $495, council did approve a four per cent increase to property taxes with the intention of revenue generation for the city.
Examples provided by Brown show that a property owner of a house assessed at $17,360 in 2012 paid $692 in 2012 taxes ; the same house was reassessed this year at $51,800 bringing the 2013 taxes up to $825.23. The property owner of a house that was assessed at $76,160 in 2012 paid $1,360.79 in 2012 taxes and with a 2013 reassessment value of $153,230, the same owner will pay $1,472 in 2013 taxes.
Property taxes of newer-constructed homes actually decreased. A property valued at $144,340 in 2012 was charged $2,136 in taxes while it was reassessed at $243,880 in 2013 and saw a property tax decrease of $86 to $2,050. A property assessed at $123,620 in 2012 paid $1,900 in 2012 taxes and will pay $1,765 in 2013 taxes on a reassessment value of $199,220.
The Base Tax for condos (multi-residential properties) will increase from $495 in 2012 to $620 in 2013. This means the owner of a condo valued at $29,120 in 2012 paid $826 in taxes and will pay $951 in 2013 taxes based on a reassessment value of $53,900. The owner of a condo assessed at $100,303 in 2012 paid $1,632 in 2012 taxes and with a 2013 reassessment value of $171,990, taxes will rise to $1,678 in 2013.
The uniform mill rate was reduced more than seven points, from 22.4 in 2012 to 15 in 2013. Mill Rate Factors were also adjusted to reduce impact on property owners.
The tax mix between taxes raised from residential and commercial properties sits at 70 per cent tax revenue from residential properties and 30 per cent commercial properties, which is similar to other Saskatchewan communities.
The Hospital Levy will increase from $294,600 in 2012 to $296,600 in 2013. The hospital loan will be paid in full midway through 2017, which will then dissolve the Hospital Levy.
The Infrastructure Levy will remain unchanged from 2012 at $50. As at Dec. 31, 2012, the current reserve balance was $146,000. The reserve balance is strong and experienced an increase due to numbers set on land sales and reserve sales.
The Land Development budget has yet to be discussed by council but current land sales are in excess of $500,000 to date and estimated sales in the 2013 budget are $650,000; $738,582 is budgeted for capital expenditures.
