Tuesday, June 12, 2018 - 12:15 PM

Understanding Proposed Changes to Mil Rate Reduction

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In the first week of June, residents of the City of St. John’s that currently get a discount on their property tax because they are not serviced by municipal [water and/or sewer] infrastructure received a letter outlining a proposed change to the discount.

What is being proposed?

  • Residents who are not connected to either water or sewer or both services get a .5 mil rate reduction for no water connection and a .5 mil rate reduction for no sewer connection, potentially amounting to a total 1.0 mil rate reduction, are also discounted $580 for water tax. The water tax is charged to cover the cost of drinking water delivery and sewage treatment.
  • The city is proposing a reduction in the discounted amount, from a .5 mil rate reduction for water to .1, and .5 for sewer to a .2 mil rate reduction.
  • The City of St. John’s Act states that property owners must receive a discount if they are not in receipt of water and/or sewer services; however, the amount of the discount is at the discretion of Council.

Why is this reduction being considered?

The City of St. John's is in the process of developing its next three-year budget and considering increasing financial pressures and a changing economy we are considering all options to ensure we continue to offer a high level of service at fair cost to all.

As we look to neighboring jurisdictions, many do not provide a mil rate discount for the unavailability of water or sewer service. While the City is committed to honouring the City legislation, we must find a more equitable way to provide the discount while being fair to all taxpayers.

At the time the current discount was determined, the City did not administer a water tax and as such compensated the property owners for the fact they could not avail of the service. When the water tax was implemented in the 1970s as a stand-alone item, it was not charged to those who could not avail of the service. As a result, some properties are in fact receiving two tax reductions for the same thing – they are not being charged water tax and they are also receiving a mil rate reduction.

Has this decision already been made?

No. No decisions have been made at this point, however we are considering this option and would like the opportunity to discuss this with impacted residents.

What will be the impact on property owners?

  • Based on a home valued at $300,000, a property owner fully connected to water and sewer services pays $2700 in City taxes, which includes water tax and is based on the current mil rate of 7.3.
  • Residents not connected to water and sewer living in a home of the same value pay $1890 in City taxes, a reduction of 31.8%. 
  • Using the same mil rate and property values, under the proposed change, a resident would pay $2130 in City taxes, a reduction of 23.1% over residents connected to water and sewer but an additional $240 over previous tax bills.

The City recognizes that this is a change in tax practice and would like the opportunity to discuss this and other options with impacted residents before any decisions are made.  If you are a resident impacted by this proposal, you are encouraged to provide your feedback to Council either through emailing engage@stjohns.ca  or dlane@stjohns.ca, directly to any member of Council, or by attending the upcoming information session.