Civic CentsFrom Budget to Taxes 2011

Budget-to-tax timeline

• June 2010 Council sets 2011 Budget Guidelines

• July 2010 Council sets Corporate Outcomes and begins work on measures for 10-year goals

• Nov. 9, 2010 Draft 2011 Operating Budget presented

• Nov. 22, 2010 Non-statutory Public Hearing

• Dec. 9, 2010 Council sets 2011 Operating Budgets with 3.85% tax levy increase

• January 4, 2011 Assessment Notices mailed; determine each property’s share of total tax levy

• March 14, 2011 deadline to appeal assessments

• Spring 2011 Education Tax Requisition from the Province of Alberta

• April 2011 Council sets final tax rate

• May 2011 Property tax notices are mailed

• June 30, 2011 Tax payment deadline

Important to know

• 310,000+ Assessment Notices mailed January 4

• Tax notices will be mailed in May

• Most home owners to see an increase in the assessed value of their property from last year – 9% average increase for single-family homes

• The Assessment Notice will show property owners an estimate of their tax based on the change in their assessment. This does not include:– City Council’s approved 3.85% average tax increase

– The provincial education tax amount

Confusion on taxes

• Many Edmontonians:• Are confused by market value assessment

and how it affects their property taxes.

• May believe that the increase in property value equates to the same rate of increase in city taxes.

• Don’t directly link their property taxes to the city services they receive.

Typical Edmonton household taxes

For every dollar that an average household spends in taxes each year, less than 5 cents goes towards City services such as: • police• fire rescue• roads• recreation• parks• snow removal• etc.

Reasons for confusion• Federal/Provincial income taxes

automatically increase with salaries• Property taxes must be increased by

City Council to pay for increased costs• Income taxes usually come off pay

cheques automatically, while most property taxes paid all at once

• Property taxes distributed by market value assessments

How it works: From Budget to Taxes

1. City Council sets the budget based on citizens’ priorities.

2. The City projects how much revenue it expects to receive.

3. The City calculates the remaining revenue requirement.

4. The City determines each property owner’s “fair share” of the property tax requirement.

Each property owner is asked to contribute their “fair share” based on the market value of their property, relative to the value of other properties.

The City calculates fair share according to the market value assessment for each property.

Edmonton’s total taxes are based on the City Budget. City Council decides every December the level of services and types of programs,

based on what Edmontonians want and need…

…things like transit, police, snow clearing, libraries … everything we see and depend on

each day.

1

The City adds up the cost of paying for all the services and programs, including the cost of inflation for fuel, materials, labour,

etc. for the year ahead.

The City also gets revenue from things like

grants, user fees, permits and

investments.

The City subtracts what it gets from this other

revenue and the amount left over is the

the total amount the City needs to collect from property taxes.

If this total cost is higher than last year,

our tax increase.

For 2011, the total tax increase

is 3.85%.

2

3

2011 budget distributes taxes

The City uses a fair and transparent

method to determine each homeowner’s

“share” of total taxes needed.

4The Province of

Alberta requires all municipalities to use the assessed market

values of each property to distribute

taxes fairly.

Total taxes needed

Fair share of taxes

$ $ $ $

$ $ $ $ $ $ $ $

Property taxes are relative: One house valued at twice as

much as another house will have twice as

much property taxes.

$ $ $ $ $

For SaleThe City determines the

assessed value for each house based on what it would have sold for on July 1.

City assessors use the same factors as a real estate agent: • location• neighbourhood • size• age and condition

They use records of selling prices of similar properties in similar areas.

These records are online for homeowners to check, using a code on the assessment notice.

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

The values of all properties are added up for the total market value

assessment for the entire city.

$ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $

$ $ $ $ $ $ $ $

One house value is a percentage of the total market

value of all properties.

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $

$ $ $ $ $ $ $ $

Total taxes needed

Total market value of all properties

Your share

This percentage is the same as that property’s share of the total taxes the City needs.

X%

X%

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $$ $ $ $ $ $ $ $ $ $ $ $ $ $ 2011 $$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ 2010 $ $ $$ $ $ $ $ $ $ $ $

Market value assessment is just a tool to distribute taxes.

Even if the value of all properties in Edmonton goes up or down, the City doesn’t

get any more or less taxes.

The City only collects enough taxes to pay for the services in the budget.

Total market value of all properties

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $ $ $ $ $$ $ $ $ $ $ $

Put another way: Total Taxes required in

the Budget, divided by

Total Assessed Valueof all properties

in the city = the property tax rate

Total taxes needed

Total value of all Properties’ Market Value Assessments

= Tax rate

Property tax rate

x your

property assessment = your tax bill

5

Your percentage of total – your fair share

Total amount

needed from residential property

taxes.

A%

A% X = Your Tax Bill

Recap

Total market value of all properties in

Edmonton

$

Key point for Property Owners about assessment notices

• This is NOT the tax bill (that comes in May)

• Homeowners are getting their property assessment early so that they have:Time to review their assessed value and call

City assessors to ask questions.

Assessment Review Period ends March 14, 2011.

Key point for Property Owners

1. Review your home’s assessed value. Check if it reflects what it may have sold for on July 1, 2010. (optional) Compare to others in your areas online; (optional) Compare to online list of house sales for similar properties in similar neighbourhoods.

2. (optional) Call the City if you have questions or concerns. Many issues can be resolved right away.

3. (optional) Appeal the assessment before March 14.

4. Calculate your estimated taxes.

• Review your home’s assessed value. Make sure it reflects what it may have sold for on the open market as of July 1, 2010.

• City assessors use similar factors as real estate agents, including age, condition, size, location, record of sales of similar houses in similar areas…

1: Review your assessed value

• 2010 property assessments available online

January 4

– www.edmonton.ca/assessment

2: Compare with others (optional)

Online assessment info

• Call first if you don’t think the assessment is a

reflection of the market value at July 1, 2010, or for

other questions

• Customer Service is available to answer questions at

780-496-6366

• You may appeal your assessment, but you cannot appeal your taxes in May

• Appeal deadline is March 14. (Complaint form is sent with Assessment Notice)

3: Call the City about concerns

• Edmonton property values increased an average of 9% from July 1, 2009, to July 1, 2010.– But property taxes are not all increasing at

that rate…

– How does your change in value affect your taxes?

4. Estimate your property’s change in assessment value

4. Estimate your taxesIf your property assessment…

• …increased in value the same as the average increase in all Edmonton properties (9%), your city taxes will increase by about 3.85% (total tax levy increase for the City’s budget)

• …increased in value less than the 9% average increase in value, your taxes will increase less than 3.85%

• …increased in value greater than the average increase in all Edmonton properties (9%), your city taxes will increase more than 3.85%

• …decreased in value, your taxes will most likely decrease

Use the online tool to estimate taxes

Prepare for your taxes

• Prepare for your taxes, notice comes in late May

• Taxes are due June 30, 2011

• Consider a monthly payment plan to spread the costs out over the year

– For those on the monthly payment plan, your monthly payment will be adjusted in July for the new tax impact