Unorganized areas likely to see tax hike

FORT FRANCES—In a move to create one fair and consistent property assessment system across the province, the Ontario government has decided to proceed with provincial land tax (PLT) reform—with legislation slated to be introduced this fall.
If passed, the government will implement a current value property assessment (CVA) system in the unincorporated areas similar to that seen in the organized parts of the province.
These changes would take effect in 2009, with any new revenues that may result from the PLT reform to be used to support services in the north.
Fort Frances Mayor Dan Onichuk said news of the PLT reform has been a long time coming.
“As it relates to things like the District Social Services Administration Board that deals with welfare, housing, and ambulance services, right now people in unorganized areas contribute zero to that,” he noted.
“In every household in Fort Frances, in Rainy River District, in all the organized municipalities, there is a per capita.
“In the unorganized areas, they don’t pay anything towards those, specifically from property taxes,” added the mayor. “It all amounts to everybody paying their fair share for those services.
“Provincial land tax reform will make that a reality.”
With area residents paying more of those taxes, Mayor Onichuk speculated that PLT reform could result in territorial changes.
“With people in those unorganized areas now having to pay those taxes, it may, in fact, be in their best interest to join Fort Frances,” he remarked. “They would get additional services and not be considered ‘non-residents,’ so they would save money on facilities here.
“It may be an opportunity to look at things that way.
“I would expect all unorganized areas are going to go, ‘Well, if we’re going to have to pay the taxes, we may as well have a say in who’s going to be up there, speaking on our behalf,’” continued Mayor Onichuk.
“It may be a good thing in the end.”
“We, as a group of municipal leaders, have been pushing for land tax reform for a long time,” noted local DSSAB chair Valerie Pizey, who also is mayor of Lake of the Woods Township.
She added it’s possible PLT reform could result in municipalities looking again at an Area Services Board (ASB).
“The Rainy River municipalities a number of years ago made an application for an Area Services Board, which would bring more services together so the costs would be shared more evenly across the district,” Mayor Pizey explained.
“Quite honestly, some of those areas east of Fort Frances without municipal government would probably be assessed a lot higher than they are under the present system [with PLT reform].
“While they still use the services from the Town of Fort Frances, the rest of the municipalities share in a lot of the costs with our joint organizations,” noted Mayor Pizey.
“But those areas that don’t have municipal government don’t share in the costs and their taxes are a great deal lower than ours.
“I would like to see an even playing field for everybody. Hopefully, this is what the provincial land tax reform is supposed to do,” added Mayor Pizey, saying the Area Service Board model had to be put on hold several years ago because the promised PLT reform never happened.
Fort Frances Coun. Tannis Drysdale, vice-chair of the local DSSAB, said everyone owning property in unorganized areas should be taxed according to services they have access to, but not anything more.
She noted the provincial downloading of services like public health and social services onto municipalities has resulted in situations that are unfair.
For instance, since property tax is the main means by which municipalities can collect money to pay for essential services, the amount of assessed property determines the limit of tax dollars available to pay for those services.
If properties in unorganized areas were assessed with a revised formula, they would pay for a greater share—and thus organized areas that currently carry much of the burden when paying for essential services wouldn’t have to shoulder quite as much.
Coun. Drysdale explained it like this: Organized municipalities pay for essential services like DSSAB, policing, and public health based on property assessment.
Before provincial downloading, social services were paid through income tax. When the province downloaded these services to district municipalities, they had to be paid through property tax.
The school board tax amount went down for organized municipalities when boards of education lost their taxation powers to help pay for downloaded services.
But school board tax rates didn’t go down for unorganized areas, who also pay a uniform tax rate, set in 1954, of 1.5 percent of the assessed value of the property.
(Many property owners in unorganized areas here pay between $40-$60 in property taxes a year regardless of the actual value of their property).
The province looks at the total assessment of those unorganized areas—some assessments which are up-to-date; many which aren’t. The province then provides DSSAB with a grant in lieu based on that assessment.
Essentially, the province is paying for the social services, not the unorganized areas.
Coun. Drysdale noted the province has its own formula, and this means whatever the budgeted amount of DSSAB is on a given year, it has no effect on how much the unorganized areas pay—but a definite impact on organized municipalities who pay a share accordingly.
On the other hand, Coun. Drysdale conceded residents in unorganized areas have been paying too high a school board tax, and this, in fact, will be fairly reduced with the PLT reform.
Without the legislation having been introduced yet, Coun. Drysdale said it’s not easy to say right now how much this proposed PLT reform will affect organized territories’ share of costs for public health and social services.
“What will change with this is the opportunities for DSSAB to explore Area Services Boards and find cost-savings there,” she noted.
“Maybe we could look at alternative models for various services, and find cost savings and therefore reduce everyone’s charges—both the organized and unorganized charges.”
Coun. Drysdale said the proposed legislation bears watching, as the needs of North Bay, for instance, are not necessarily the same as Rainy River District, and groups like the Northwestern Ontario Municipal Association will be trying to “make sure we get the best deal for Northwestern Ontario.”
Personally, she, along with groups such as NOMA, feels that social services should not be tied to property tax.
“Ultimately, it’s the goal of NOMA, in the long-term, to reduce the charges on property taxes related to health care and social services. Now, the folks in unorganized territories can help us in that fight,” Coun. Drysdale remarked.
The PLT reform legislation has come forth following extensive consultations in Northern Ontario. In 2004, Ministry of Finance staff met with about 350 stakeholders in 11 major municipalities in the north to consult on PLT reform.
At these meetings, municipal leaders indicated that PLT was necessary, the province said in a letter sent out to property owners in unincorporated areas last month.
The issue of PLT stems back to 1998 when the province implemented CVA, but not to properties in the unincorporated areas.
The province has said it will ensure that if there are any PLT increases, it will be phased in over time.
Should the legislative changes receive Royal Assent this fall, a reassessment of properties in the unincorporated areas outside of school board boundaries will occur.
The updated assessments would apply to the 2009 tax year.
The Ministry of Finance will be holding public information sessions in the near future to inform unincorporated taxpayers of the proposed changes to the PLT system.
The Provincial Land Tax Act was introduced in 1924 but hasn’t seen many changes over the years.
There has been no reassessment of the roughly 60,000 provincial land tax accounts since 1940 and the tax rate has not changed since 1954.
As mentioned, a uniform tax rate of 1.5 percent applies to the assessed value of all property and there is no classification of different types of property.
(Fort Frances Times)

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