BOW VALLEY – A push to look at the formula for the province’s education tax is being made by the Town of Canmore after it was hit with one of the highest percentage increases in Alberta.
Canmore Mayor Sean Krausert highlighted in a letter to Alberta’s education ministry the high cost being borne by Canmore property owners since the education tax makes up nearly half a tax bill.
However, with four of the area municipalities seeing assessment value increases between 17 and 25 per cent, the issue has hit hard for residents between Lake Louise and Kananaskis.
The June 20 letter to Minister of Education Demetrious Nicolaides had Krausert indicate the impact the education tax has on Canmore residents.
He noted the way the province calculates the education tax – using assessed value of homes – has “increasingly disproportionately impacted the residents of Canmore” because of the high growth in residential assessments.
“Canmore’s rates of increase have been among the highest in the province, resulting in an increase year-over-year in the requisition by 23 per cent for 2024, totalling an additional $5.6 million to collect on behalf of the province from our residents,” wrote Krausert.
“This rate of growth in our portion of the education tax has not been matched by population growth, or increased investments in the education system here in our community.”
He said with residents having affordability issues, a significant increase in overall property taxes is having an impact, especially when council has only an aspect of control.
Though the province kept the 2023-24 mill rates for the education tax, with property assessment growth largely happening across the board in Alberta, it meant more revenue to be collected to the tune of 9.2 per cent.
A property is billed $2.56 per $1,000 of residential or farmland assessed value, while a non-residential rate is $3.76 per $1,000 of assessed value.
A Town of Canmore property tax bill, for example, has a breakdown of costs. Depending on the type of property and where it’s located, it could have residential or non-residential municipal taxes, vital homes, BIA levy, Bow Valley Regional Housing and the education tax.
Broken down into municipal property tax, provincial requisitions and additional charges/credits, the majority of property owners are likely to focus on the total amount due rather than the specific breakdown.
“There is a segment of the population that doesn’t differentiate between the municipal portion and the education portion,” Krausert said. “They see the total and for those, it’s really important that there is a difference, and we don’t control the provincial side at all. We also don’t control the assessment. We only control the [municipal] budget.”
Impact on other valley municipalities
For other municipalities in the region, the education tax saw large increases.
The Town of Banff will collect $10.3 million for the education tax this year and have a total property tax collection of $35.6 million. The MD of Bighorn set its 2024 budget at $11.93 million, but about $3.5 million will be for the education tax. Improvement District No. 9 will collect $3.044 million and Kananaskis Improvement District $621,228.
“There is no evidence that any of that $10.3 million that they take out of Banff gets put back into Banff,” Mayor Corrie DiManno told the Outlook in March.
“For Banff, it’s up 18 per cent and we were not expecting it to be that high.”
According to the 2024 education property tax requisition comparison report, the largest assessment percentage increase from a non-summer village, village or townsite community from 2023 to 2024 was Improvement District No. 9 from $2.43 million to $3.04 million for 25 per cent. Canmore was next at 23 per cent, followed by Chestermere at 20 per cent, Carstairs at 19 per cent, while Fort MacLeod and Banff were each 18 per cent and the MD of Bighorn was 17 per cent.
It means when not including summer villages, villages or townsites, four of the seven municipalities are in the Bow Valley and had the highest percentage increase from 2023 to 2024 in education tax.
In the Bow Valley, Canadian Rockies Public Schools approved a $37.5 million budget for 2024-25. Its budget projects receiving $23.11 million from the province.
Provides ‘fair and equitable education system’
Darryl Hunter, a full-time professor with the University of Alberta’s faculty of education, said using property taxes to collect revenue for education is a common formula in Canada.
Though it can be controversial, it provides a stable source of income for education services with the public sector reliant on property tax, consumption tax such as a provincial sales tax and income taxes.
“It doesn’t matter if it’s an ordinary citizen, a small business owner, a corporate owner or a railway company, they have to pay the property tax,” he said.
“It affords some degree of continuity and stability, although it might not look that way from the point of view of the taxpayer.”
He noted the idea of publicly funded education began in the 19th Century with Egerton Ryerson in Ontario. It was eventually built into the Constitution that public and Catholic schools would be supported by property taxation.
“He was, in a lot of ways, the founding father of public education in Canada. … Ryerson convinced the government it should get into the business of taxing [for education purposes], so it could have a fair and equitable education system,” he said.
“It’s built right into the Constitution and if someone thinks they can change the Constitution, then I wish them luck.”
‘Fair and transparent education tax system’
Michael Francoeur, assistant communications director for the Ministry of Municipal Affairs, said the province has no plans to change how education tax is distributed.
“The education property tax provides a fair and transparent education tax system for all property owners,” he said.
“Under the provincial funding model, all education property taxes are pooled by Alberta Education through the Alberta School Foundation Fund and distributed to public and separate school boards on an equal per-student basis. The current distribution system ensures that students receive a quality education regardless of their municipality’s assessment wealth.”
He noted there aren’t programs or policies in place for when property assessment values increase, which impacts education tax requirements.
“Costs of any such mitigation would need to be borne by other property taxpayers in the province,” he said. “This would impact fairness and shift the tax burden onto municipalities with lower assessment growth.”
Krausert highlighted though assessed property values are high, it can only aid residents if they sell their property.
“This dynamic is particularly challenging when the messaging from the province has been that the provincial education tax rates were frozen. Many residents are not aware of the connection that while rates may be frozen, the growth in assessment values have resulted in double-digit increases for our community’s requisition overall, leading to confusion and concern when the tax notices are received.”
Property assessments are completed independently from a municipality, with properties assessed based on the economic condition as of July 1 and the condition as of Dec. 31.
A median assessed residential home in Canmore is now more than $1 million. A single-detached home is assessed at $1.383 million and a condo is $761,000.
Canmore council approved its budget last December with an operating budget of about $77 million. The municipal tax requisition was set at $34.88 million after a 7.6 per cent municipal tax increase.
However, the provincially-approved education tax rose by 23 per cent in Canmore to make up $30.378 million – up by about $5.6 million from 2023 – needed to be collected on the property bill for the province.
“I really feel for those whose assessment went up higher than average, which is beyond the municipality’s control because assessors operate according to the regulations and they are accountable to the province,” Krausert said. “[Some] got hit significantly. I’ve heard 30 to 40 per cent increases year over year and the vast majority of that is the provincial requisition combined with above-average assessment.”
It means for every $1 on a Canmore property owner’s tax bill, $0.53 goes for municipal services, $0.45 goes to the province for education and the remaining $0.02 for seniors’ housing with Bow Valley Regional Housing.
In Alberta, a municipality has no say in the education tax, but is required to collect on behalf of the province. It can often lead to confusion with a taxpayer believing a municipality establishes the levy, but a municipal government is only the go-between in the money getting from property owners to the province.
“This particular increase hurts our affordability and for many people who house rich but cash flow wanting, this is particularly hard to satisfy,” Krausert said.
'Stable equitable education system'
A key principle of the education system is “policymakers want to ensure all students have equality arising in the school system,” Hunter said.
“It’s a pursuit of equality – that’s not necessarily so in other countries. … There’s a pretty strong consensus that schools are an enormously important part of Canadian society and we have to give kids an equality of opportunity to get ahead,” he said.
Hunter highlighted in other countries – such as the United States – a private education system may be more prevalent.
“A large number of people will say ‘the school is to enable my family to get ahead. It’s not there to enable my neighbour to get ahead’ so it’s part of an understanding that I think explains why the Canadian education is quite well regarded internationally.”
The province’s education ministry has a budget of $9.3 billion in 2024-25 after it received a $393 million increase in operating expenses in the 2024 budget. The education tax covers about 30 per cent of education costs provided by the provincial government.
“I know some taxpayers might not believe it, but property taxes are stable. People do not like to avoid paying their property tax since they want to keep their properties,” Hunter said. “It becomes a stable source of revenue for schools and hence the school system is stabilized by building its operations on the property base in that community and the province continually struggles with how it relocates resources from the property tax so there’s that quality of opportunity for students.
“The property tax lends a degree of stability to education for use because youth depend on that stability for growth. Property tax is the most stable source of revenue for having a stable equitable education system.”
REGIONAL MUNICIPALITIES EDUCATION TAX ASSESSMENT VALUE INCREASE
- Town of Banff: $8.799 million to $10.343 million in 2024 – 18 per cent increase
- Town of Canmore: $24.743 million in 2023 to $30.351 million in 2024 – 23 per cent increase
- MD of Bighorn: $3.035 million in 2023 to $3.561 million in 2024 – 17 per cent increase
- Improvement District No. 9: $2.437 million in 2023 to $3.044 million in 2024 – 25 per cent increase
- Kananaskis Improvement District: $559,678 in 2023 to $621,228 in 2024 – 11 per cent increase
CORRECTION: The original article incorrectly stated education property tax increases went up between 17-25 per cent for four Bow Valley municipalities. However, the education property tax increase was frozen by the provincial government in 2024 and it was the assessment value increase. The article has since been updated and the Outlook apologizes for the error.
