Duane Hicks
As town council and management begin rolling up their sleeves on the 2009 municipal budget process, one major factor will be a loss of tax revenue from the local mill thanks to the property reassessment announced last month by the Municipal Property Assessment Corp.
“This recent reassessment, which came right out of the blue for the large industrial class, is very significant,” said Fort Frances CAO Mark McCaig. “It reduces their assessment by $6 million approximately.
“The impact is huge,” he stressed. “It’s a $500,000-plus loss in tax revenue for the town.”
After receiving the mill’s minutes of settlement for 2008 this past spring, the town already was expecting to see a reduction in tax revenues from the mill to the tune of $95,000, said treasurer Laurie Witherspoon.
But with the further reduction in assessment revealed last month, that amount now will jump to a total of $513,000 less in taxes for the town.
Witherspoon explained the 2008 minutes of settlement for the mill saw a reduction of $1,453,265 in large industrial assessment, but the more recent reassessment brings that total down another $6,115,553.
The town’s large industrial assessment total started at $26,149,521 at the beginning of 2008, but has since dropped to $18,580,703 for 2009.
Witherspoon said it is possible the town will be able to use revenue neutral tax rates (as opposed to starting tax rates), which would reduce the loss to $359,769, but this is something council will have to decide on. And even then, they may have to apply to the Ministry of Finance to do so.
While it’s too early to say right now how the tax revenue shortfall will affect the town’s budget, “the loss in tax revenue, if we’re going to deliver the same amount of services that we deliver, has to be picked up somewhere,” said McCaig.
Witherspoon said as it stands right now, the $513,000 shortfall translates into a six percent tax hike.
“The huge impact for the town is with this loss of revenue, right off the bat, before we even budget for the new year, that’s a little over a six percent increase if we have to make that up in taxation,” she added. “That’s right off before we even start looking at our 2009 budget, any new capital financing, any of that stuff.
“We’re already looking at a six percent increase, unless the government comes along and has some mechanism to help mitigate this financial impact.
“We’ve had no word yet.”
While the reduction in taxes from the mill obviously will have a direct impact on tax revenues for Fort Frances, McCaig also pointed out that because there’s large industrial reassessment going on elsewhere in the district, like at the Atikokan generating station and the OSB mill in Barwick, there may be further ripples felt here.
“How is that going to affect our DSSAB? I don’t know at this point,” said McCaig. “In terms of Fort Frances’ contribution to that, we don’t know these kinds of things at this point.
“This is a huge issue,” he warned. “These were huge reductions in assessment to the industrial class. It’s huge for municipalities.”
McCaig said what also stings is that the news of the reduced assessment was a surprise. “This comes right out the blue, too. There was no forewarning of this—right out the blue,” he remarked.
As previously reported, the local mill also was successful in its minutes of settlement for 2003-07, which translated into the town having to write-off $844,688.60 in taxes.
“After the recalculation of capping, the municipal portion was $604,867.08,” said Witherspoon, explaining the town was able to “claw back” the education portion, although for Abitibi’s benefit, the write-off is still for the total $844,688.60.
Meanwhile, the town budget process is in its early stages, with town managers and executive committees having been working on their respective division budgets.
A special committee of the whole meeting was held this afternoon to discuss user fees, waste diversion, and water and sewer rates.
The committee of the whole is expected to receive a draft budget by Dec. 22, and then special meetings will begin in January and continue every other week through March as council and management hammer out the details.
A public meeting to present the 2009 budget to residents then will be held March 23, with the budget scheduled to be ready for a final vote April 13.
