The City of Sault Ste. Marie may be forced to back out of a commitment to keep this year's residential property tax increase equal to or less than the expected total levy increase of 3.31 per cent.
Quite aside from the so-far-unpredictable fiscal impact of the COVID-19 pandemic, the Sault has another problem.
That problem, according to Shelley Schell, chief financial officer and treasurer, is that for the first time in 13 years, our assessment growth has become virtually nonexistent.
Ever since the first tax records were inscribed on clay tablets 8,000 years ago in the Sumerian city of Lagash, governments have assessed ability to pay based on ownership of property.
Lady Godiva's legendary horseback ride through the streets of Coventry, England was said to have been a property-tax protest.
In ancient Egypt, tax assessors are claimed to have been so highly valued, they were the only civil servants spared from being slain and buried with a recently departed Pharoah.
"Send out the assessors!" Julius Caesar ordered Pharaoh's regent Pothinus in George Bernard Shaw's 1898 play, Caesar and Cleopatra. "Is it possible that Caesar, the conqueror of the world, has time to occupy himself with such a trifle as our taxes?" asked Pothinus. "My friend, taxes are the chief business of a conqueror of the world," Caesar replied.
Assessment growth results from construction or expansion of buildings, and from assessment corrections and revisions.
It provides the municipality with added tax revenue for new services that support the public good.
Statistics to be presented by Schell to City Council on Monday show that in the 19 years from 2001 to 2019, the Sault experienced positive assessment in growth in all but three years: 2002, 2004 and 2006.
But 13 years of non-stop assessment growth ended last year.
And that's hurled a crowbar into the teeth of a long-term tax policy set by City Council in November 2016.
"Managing the tax objectives proactively for 2020 was problematic due to virtually zero per cent assessment growth in 2019 resulting in very little new municipal revenue," Schell says in a report to be presented Monday to City Council.
"Staff were unable to provide alternate ratios that would address keeping the residential class increase at or less than the levy increase."
"Proactive decreases to the industrial and commercial classes could not be achieved either without impacting the residential class to a greater extent."
"The objectives are in conflict with each other without assessment growth available, so one objective cannot be maintained without impacting the other detrimentally," Schell says.
At next week's City Council meeting, she'll ask for a 3.6 per cent hike in residential property taxes.
That's more than the planned 3.31 per cent hike, but Schell says 94.3 per cent of residential properties in the city will have increases less than $200, with an average hike of $84 for single-family dwellings.
Schell's request to councillors won't be about the overall tax levy.
That was set at $119 million back in December when the 2020 operating budget was approved.
Monday's discussion will be about how the tax burden is distributed among tax classes: residential, industrial, commercial, etc.
She'll be trying to minimize the impact on homeowners while still maintaining a decrease in tax ratios for the industrial and commercial classes.
Here are other increases City Council will be asked to approve:
- new multi-residential - 9.80%
- multi-residential - 9.68%
- commercial occupied - 2.24%
- commercial excess land - 3.19%
- commercial on-farm business - 0.00%
- shopping occupied - 0.98%
- shopping excess - 0.00%
- office occupied - 5.32%
- office excess land - 0.00%
- parking/vacant land - 5.50%
- industrial occupied - 3.07%
- industrial excess land - 4.50%
- industrial vacant land - 5.04%
- industrial on-farm business - 0.00%
- large industrial occupied - minus 0.64%
- large industrial excess - minus 1.20%
- landfills - 0.00%
- pipelines - 3.10%
- farm - 10.44%
- managed forests - 4.86%
Under the proposal, taxes on a typical (median) apartment building in Sault Ste. Marie would rise $1,742, while a small office building's bill would decrease $40 and a standard industrial property would go down $455.
The tax bill for a median small retail commercial property would raise $47.
Schell emphasized that her calculations don't take into account the effects of education taxes or tax capping.
"The financial impact to the community due to the COVID-19 pandemic has resulted in council waiving all interest and penalties on tax payments," Schell said.
"Staff is recommending that the normal due date schedule be maintained. The final tax billing bylaw 2020-90 sets the interest at zero per cent until such time that council re-instates and amends the bylaw. Interest being set at zero per cent in effect allows a deferral of the tax installments," Schell said in her report to Mayor Provenzano and councillors.
"Interest and penalties on past due installments at zero per cent will result in a negative variance to the 2020 operating budget revenue of $1,215,000 and may result in an operating deficit for the 2020 fiscal year. This deficit along with other revenue decreases and additional expenses related to the COVID-19 pandemic will be reported to council at a subsequent meeting."Waiving interest on taxes
Mover: Councillor M. Shoemaker
Seconder: Councillor R. Niro
Whereas on March 23, 2020, council agreed to waive interest and penalties on late payment of the May 5, 2020 tax instalment until June 2020; and
Whereas it appears the COVID-19 pandemic will take much longer than originally anticipated to subside and return to a more normal economy in Sault Ste. Marie and across Canada;
Now, therefore, be it resolved that council extend the date by which residents can defer their tax payments without interest and penalties to August 5, 2020.
Sewer surcharge
Mover: Councillor R. Niro
Seconder: Councillor M. Shoemaker
Whereas the 2019 novel coronavirus (COVID-19) has impacted people all over the world including our own community of Sault Ste. Marie; and
Whereas the province has enacted a declaration of emergency to help contain the spread of COVID-19; and
Whereas as a result of the declaration many businesses were required to close, allowing only essential businesses to remain open; and
Whereas the closing of all but essential business has resulted in significant unemployment, and has caused significant financial difficulty for both employers and employees; and
Whereas over the last several weeks the federal and provincial governments have rolled out numerous support programs for both employers and employees; and
Whereas it is the desire of the Sault Ste. Marie City Council to find ways in which we can help and support those in need during these difficult times of the COVID-19 pandemic;
Now, therefore, be it resolved that City Council suspend the collection of the City of Sault Ste. Marie sewer surcharge for the months of April and May 2020;
Further be it resolved that should the declaration of emergency carry on for an extended amount of time, that Council revisit the collection of the sewer surcharge at that time.
Because of the pandemic lockdown, next week's City Council meeting will be teleconferenced, with councillors calling in from their homes.
The meeting will be livestreamed on SooToday starting at 4:30 p.m.