Are Cortes property owners paying more taxes because their assessments went up? The topic came up at the Wednesday November 7, Electoral Areas Services Committee (EASC) meeting. Mike Harmston, Chief Financial Officer for the Strathcona Regional District (SRD), wanted to correct three widely believed myths.

“The first one is the assessment increase automatically translates to a property tax increase. A lot of people compare property taxes  to a sales tax where they requisition a fixed amount. For example With a provincial sales tax at 7%, if the underlying price of the goods rises, the government automatically collects more money. Whereas in the  local government, we requisition a fixed dollar amount, so there’s not always that automatic increase. Quite often, everything else being equal, when assessment values rise our applicable tax rates go down.”  

To which Mark Vonesch, Regional Director for Cortes Island, responded, “I think it’s worth noting that on Cortes this past year that the assessments were increased  more in proportion to the rest of  the district. So in Cortes’s case, property assessment increases did cause a property tax increase.” 

David Leitch, Chief Administrative Officer of the SRD, objected to this, “No, that’s not true.  It doesn’t matter where the area is because we have shared service. We have individual services. So each one of those has a requisition taxation limit to it. So if you have a park service on Area B,  that has a requisition limit and it’s not tied to any other areas.” 

“All the areas will go up differently, but those individual requisition limits are not tied to assessment value.  They’re all individually assessed. So you could go up twice as much as somebody else and in fact, if you did, it’s more likely that the taxation assessment will go down. I don’t know if it’s ever happened that  the requisition goes up. I would say 99 percent of the time, if not 100, the taxation assessment will drop.”

Director Vonesch: “For shared services across the district, where property values increase more on Cortes than in Campbell River, for example, and we’re both paying into the shared services – doesn’t the proportion that Cortes pays increase?”

CAO Leitch: “If your assessments are going up, the taxation will go down on that.  Think of it as a shared service. Let’s say you held level water on it, then that assessment might mean you could collect $200 grand more throughout the whole service but we bring forward a budget and it says you only need $50 grand. Everyone’s taxation has got to drop or else we’d collect way too much money.” 

Gerald Whalley, Regional Director for Area A, pointed out, “David, I think what he’s saying is that the mill rate will go down as the assessment goes up. That makes sense.  If there’s a two participant service and the one area assessments go up but the other area doesn’t, the mill rate will drop a bit – but each individual household will still pay a bit more in the higher assessment.”

CAO Leitch: “When assessments go up, it almost always triggers a reduction in the rate.” 

Director Vonesch: “In the mill rate. Yes, I agree with that.” 

Mike Harmston: “They’re  both correct. What the slide is really focusing on is the amount of dollars we collect.  The amount of dollars we collect is independent from the assessment increase.  We don’t even look at the assessments until the last minute  when we calculate the tax rate.”

Director Vonesch: “If Quadra and I are sharing a service, and our property values increase by 20%, that would mean that Cortes would cover more of the cost of that service?” 

Mike Harmston: “That’s exactly right. If you two shared, then if yours went up 20% and Area C went up 40%,  both assessments increased, but there would be a proportional more tax shift to Area C.” 

Director Vonesch: “Thank you.” 

So it would appear that Cortes residents did pay more taxes last year because of their assessments, but there are probably years where we paid less. 

Top image credit: Property Taxes – Photo by Alan Harder via Flickr (CC BY 2.0)

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