Friday, April 12, 2013

Incompetence creates Opportunity


The debate rages in the Crowsnest Pass about potential 7.5% tax increases, created by the surprise announcement April 8th that the Assessment Base had dropped 5.2% instead of the 2% that Council and Administration had been working with for the last six months.

Time to clarify things I have had a number of discussions since Monday with people that assume a 7.5% mill rate increase means a 7.5% tax increase. It does not, most people struggle to understand how our municipal taxes are determined in Alberta.

The mill rate is only half of the equation the other half is the assessed value, they are both very significant to the process but have to be measured together to determine the real
rate of taxation.

Take an average residential home in the Crowsnest Pass valued at $200,000 the municipal portion of the mill rate last year was 5.87.

The simplest way to look at that would be for every $1,000 in value you would pay $5.87 in property tax to the municipality.   ( 200 x $5.87 equals $1174)

Council throughout their much vaulted tri annual budget process took a position that the mill rate would increase by 2.5% a year. They boxed themselves into a corner, I am surprised that nobody in either Council or Administration figured this out.

Why? If they had stated there would not be a tax increase of more than 2.5% each year we would not be sitting here today having this discussion.

A closer look at their problem the mill rate going up 2.5% would have increased it from 5.87 to 6.02 which on that same $200,000 home would have raised the taxes 2.5% to $1204.

Nobody from either Council or Administration asked the question (at least not while I was there) what happens if the Assessment Base drops? (say 5%)

Now the tax on that same home that was valued at $200,000 last year at a mill rate of 5.87 even with a 2.5% increase in the mill rate this year, will be taxed at a rate of $1144 a drop of $30 from last year. (190 x 6.02 equals $1144)

Imagine a much worse case scenario if the Assessment Base had gone up 10% that $200,000 home last year hit with a 2.5% mill rate increase you would now be paying $1324 an increase of $150 over last year or a 15% increase, this is exactly why a commitment to a set mill rate increase does not work. Set Tax Rate absolutely.  

While this is good news for the taxpayers, what will council do next year if the Assessment base drops another 5% or even more. This mistake on the Assessment base and the fixation on not increasing the mill rate more than 2.5% has created a $300,000 shortfall this year.

What does Council do now? Well they can go back on their pledge, one of the fundamental planks of their tri annual budget and increase the mill rate 7.5%, the other suggestion which I feel is even a worse option would be to take $295,000 out of reserves.

I agree with Councilor Saindon’s motion to find 4% fat in the system and reduce it. It will be very interesting to see what recommendations administration comes back with. The $300,000 shortfall could be made up very quickly by looking at the level of administration we have built and the dollars we pay to maintain them. Let us hope Council does not reduce service levels and programs such as recreation when we are running a very expensive bureaucracy.
Other options I am sure are many. Maybe we do not need to send four members of our council to conventions or our Mayor to an Economic Development Conference when the EDO is going to be working under the CAO, maybe our Weed Control person could survive one more year without a new pickup. Maybe the Public Relations consultant will not be receiving any more tax dollars from the Crowsnest Pass.

Five key points to my post today:

·        This could have been avoided if the 5.2% assessment base had been projected much earlier in the budget process.
·        If Council/Administration had been aware that a 2.5% mill rate is not the same has a 2.5% tax increase
·        Committing to a tax rate increase of a certain amount works, committing to a set mill rate does not, this is one of the down sides to a three year budget.
·        If council sticks to its 2.5% mill rate increase we will get a tax break, not due to them making a brilliant strategic move here, more because they got caught with their pants down on the assessment base. It could hurt the taxpayers much more when home values begin to rise we got lucky this time.
·        The devil is in the details, if Council makes $300,000 in cut’s where they are made is the most important issue to the public. Little Johnnie’s mom will not be happy if her boy can not play Lacrosse on a Friday night, but two brand new pickup's are running all over town.   

40 comments:

Anonymous said...

Thanks for this great explanation Dean. I've been pondering the fate of Albert Stella with $300 000 shortfall. Albert Stella has a lot of users and I sure hope it isn't on the chopping block.

Anonymous said...

The really scary example is the one of rising assessment base what that could do to us with a fixed mill rate increase. My question for you Dean this is only the second year of the three year budget does next council have to live with the third year?

Anonymous said...

3:25,

I don't think anything is carved in stone. Not even for this council. Brace yourself for some new, creative, revenue generating scheme.

Anonymous said...

It takes a big man to admit his mistakes. Instead of looking for ways to come up with the 300,000$ why not just change the wording from millrate to tax rate.If nothing changes then next year we will have a way greater problem as home values have fallen even further.I guess the next council will change that as this council is so stuborn it will not admit its mistake.

Anonymous said...

Home values have not fallen. They are selling quite quickly, not far from asking price. Don't assume.

Anonymous said...

Property values down property taxes up. Good job Mare and coucil. You are the best. Only A Holes would vote you in again.

Anonymous said...

4:35 you do not think there is $300,000 that could be axed at the Muni?

5:24 It is the Muni that is saying prices have fallen based on sales over the last 12 months.

Anonymous said...

So they inflicted this mess on themselves, boy do I feel bad for them.

Anonymous said...

7:44 wrote;
"It is the Muni that is saying prices have fallen based on sales over the last 12 months."

Actually, our 2013 assessments are based on July 2012 values. These are supposedly down from July 2011. That is the big surprise.

Anonymous said...

Well, well! "The Kats and Jammer Kids" are showing their true colours. Too busy destroying, retooling and empire building to get the basics done. Now we will see where the blame is placed; will be like a hot potato being passed around. May even end up in the Inspector's hands.

Any cuts should come from the bloated Administration, and not from the field personnel or the community services. Time for them to owe up to their mistakes, and to take a haircut in wages starting at the top. Plus, sell a few trucks, fire a few people, and cut all travel.. They haven't learned much from their meetings, conferences or training courses anyway.

How many Quarters do they need? Perhaps the old boy can dig into his pockets again or pass the hat around.

Anonymous said...

Reading this weeks Bricks in the Herald plus I have heard it from other residents maybe it's time to put an end to personal use of municipal vehicles.


Anonymous said...




'Anonymous said...
Reading this weeks Bricks in the Herald plus I have heard it from other residents maybe it's time to put an end to personal use of municipal vehicles.'

Are you telling our higher than thou Mayor that driving our front end loader to Sobey's to pick up groceries is not an option?

... you have a lot of intestinal fortitude with that post.


Anonymous said...

Well, well, well our financial problems will be over. Next Friday April 19 the electrical system will be sold for big dollars. Then the town will be flowing in money my source tells me a cool $1.5 million.

Jack


Anonymous said...

Without public debate of any sort? Even they would not be that stupid.

Anonymous said...

Even this Council could not be that arrogant.
That is a municipal asset that actually makes the tax payers money $1.5 million would be an incredibly low amount for that. I hear now that Mitchell wants to sell the Bellevue seniors hall. Maybe we could sell the ski hill and arenas to.

Anonymous said...

Fortis wasn't putting in news lines in Bellevue and Hillcrest for our benefit......

Anonymous said...

Anon 8:23

Umm......I'm not so sure about that....yikes. I mean look at what has happened in the last few months....I still can't believe it.

Anonymous said...

Rumors, rumors, more rumors. Got to love it. Never a dull moment.

Anonymous said...

have you heard anything about the selling off of our electrical system and what do you thing about this asset

Anonymous said...

Anon 7:44 I do think there is $300,000 that could be axed at the Muni,easily.My point was that they should be basing their increase on the tax increase and not the millrate.Imagine if property values had gone up 10%, then your tax increase would have been 12.5%.
As for the electrical system being sold for 1.5 million without any public debate seems highly unlikely to me.But with this council you never know.How much money does it bring in right now?How much does it cost to maintain? These are the first questions that I think need to be answered if the rumour is true.

Anonymous said...

7:42

Are you starting the rumors? and then laughing about them? Looks like you get your jollies from reading these posts. Is your life so dull?

Anonymous said...


Looking at the grid ownership on the CNP site, the entire Bellevue amd Hillcrest grid is owned by Fortis. They upgraded their lines there, for whatever purpose. The grids owned by the CNP in Coleman, Blairmore and Frank are in the older areas of town. The newer areas lines are Fortis owned as are the main lines and connectors. Determining the value of the CNP portion is no easy task especially for the astute bean counters occupying seats in the muni office. If they do sell without notice, review and a vote, then there could be a use for those new power poles.

Anonymous said...

I have had enough I have been silent for too long. Can't you people quit your whining. Look how much our leaders have done for you. The town is cleaned up the highway is much safer. We have policies in place that will last a hundred years. We have a coal mine and a hotel coming. A fancy restaurant and plenty of new development around town, give it a break. They made one little mistake on the assessment base. Big deal.

Misty Schitz

Anonymous said...

Our leaders, Frau Misty? A little mistake? Just shows how biased and out to lunch you are. Please provide a list of them here so that we can all salute, bow or give the Sig Heil when we meet them in the street. So you think that the Second Reich will last a hundred years, do you? Good luck.

Anonymous said...

Misty Schitz wrote:
"plenty of new development around town"

Here is a chart of value of building permits 2000-2010:
https://www.albertacommunityprofiles.com/Profile/Crowsnest_Pass_Municipality_of/22
Anyone seen recent numbers?

Anonymous said...

Yep, Misty, they got rid of the 4 old Fire Depts, hired a new Big Fire Head, hired a medium Fire Chief, (who couldn't do inspections), hired a deputy Fire Chief, and hired 5 contract fire fighters, THEN THEY COULDN'T PUT OUT THE FIRES WITH ONLY LIMITED FIREMEN AVAILABLE. They made one little mistake on the fire reorganization. Big Deal.

Anonymous said...

Misty, you make this blog much more interesting. Must agree with you, with so much industrial activity around it was easy to miss the gas plant closed. Information sometimes is slow to process at the municipal office. This is why the 50 million decrease in the assessment just snuck up on the tax department - this is also easy to understand. But I must disagree with you with your idea of the 100 year Reich - this one will not last.

Anonymous said...

Misty, if you don't like our whining.....why do you read these posts? Nobody is twisting your arm. If you've had enough...just don't click on this site. Seems simple to me...or, do you like self torture? I beg to differ with you on "the town is cleaned up" part. Was driving around the other day, and noticed a few spots that are pretty messy. Not that it bothers me. Didn't really notice until I specifically looked for it. I'm not recommending you start harassing anyone.

About the hundred years thing....is it wise to make policies that will last 100 years in this day and age? My goodness, just 30 years ago, I didn't have a TV remote, and had to go and stand in line at the bank to cash my pay cheque on Fridays. I certainly couldn't sit in my house and talk to someone in another country, and even see them. In a hundred years, we all might just be lying on beds, with a set of virtual goggles on our eyes, living the dream life, while robots feed us through intravenous. Then we won't even need highways, let alone worry about being safe on them! Maybe we'll be zipping around in our "Jetson" like little ships, no harm to the environment, all solar powered. A hundred years....gimme a break!

But, don't let me discourage you from posting. I kind of enjoy it! Without a few nuts, the chocolate and caramel can get a bit boring sometimes.

Anonymous said...

Misty schits you are full of shits. I have a feeling you are Marion using a different name. Every one knows you are a power monger and love what is going on here.

Anonymous said...

There is no doubt in my mind that shitSY MITSY IS IN WITH MARE AND COHORTS ,THERE IS nO wAY ANYONE NOT CONNECTED WOULD MAKE HER STUPID COMMENTS OF DEFENSE for this administrtion and say they are doing wonderful. You are making a FOOL out of yourself, whoever you are, but I think I know.

Anonymous said...

BTW, Misty, you didn't mention the manufacturer "by the lakes". Is that still on? Is that why the former Bridgecreek "Trout Landing" has been zoned "Direct Control"?

Please let us in on what you know from those taxpayer funded wine'n'cheese Galas with the "people who matter".

Anonymous said...

Must agree with everyone, Misty brings humor into the conversation. It was getting a bit boring here.

Anonymous said...

Misty, If the mine comes it has nothing to do with this council, they did not go out and find these people and convince them to try and start a mine here.
And you mention a hotel.Are you sure because we are all waiting for the announcement of which big name hotel is coming here. The contract for that announcement expires in about 2 weeks.Over 2 months has gone by since the press release and open house.The mare said we had a deal about 8 months ago.My feeling is there is no hotel, that council will extend the terms of the contract right through into October when if not reelected then the deal will fall through. Makes me laugh really.I hope I am wrong.

Anonymous said...

Now we have dealt with the dip stick does anybody have any idea what they are going to slash today to solve the $300,000 mistake?

Anonymous said...

Another business gone. (Sigh) Bellevue Superstop is no more. No gas, no business. Sad.

Crowsnest Pass Home said...

My thoughts on filling the $300,000 gap. I suspect they will not be filling vacancies in the CUPE ranks in a very timely fashion.
Council will take a cut in their pay. I wonder if Admin will match?
EDO position will be pushed back a few months in place just in time for the election.
Overtime reductions.
Closing of Albert Stella and the Bellevue Seniors Hall.
Tightening of the belt on the ski hill and the town rounder.
Reduction in the number of casual employees and students for the summer.
Admin will make one more crack at taking money out of reserves (They have to have something in there that council can say no to, creates the impression that council is standing up to admin)

Anonymous said...

12:14 To bad about the Superstore always enjoyed talking to John he was a good guy.

Anonymous said...

The financial mess we find ourselves in today took almost three years to organize.... Was driving from Bellevue yesterday afternoon in the snow storm following the new shiny fire command pick-up truck. Good to see the Fire Chief driving around making sure everything was fine, on Sunday, no less.

Anonymous said...

We should lay off Misty a little bit and all be in aw of how someone has found such a state of 'Nirvana" in her delusional world.

One hundred year policies? No policy should ever last that long, as circumstances do change. They should only reflect the issues at the present times.

Three year budgets do work but mainly in large cities whose population and tax base can better absorb unforeseen occurring costs. We don't have that luxury with our small population. With no reserves any budget can go out the door in an instant.

"They made one little mistake on the assessment base. Big deal."

They made a massive mistake in implementing a big city type policy change {without knowing how to set one up)and with total disregard as to what the ramifications combined with lack of experience/judgement might be.

The fact is that their first year of budgeting was unrealistic. Forget about adhering to it for the next 2years.

The best scenario would be to change the batteries in that Crystal Ball or better yet give it, along with the Pixie Dust, back to Misty.


Anonymous said...

@ Sun Apr 14, 08:33:00 PM 2013 agree 100% that misty is the stupid be.##tch maid Marion. It is about time people realize that she has been the root of many of the troubles at the municipal office in the last ten years. It is just the last five years that she has been in the position to create such havoc.