An unprecedented increase in the assessed value of properties — both commercial and residential — in this region is raising eyebrows among those who pay municipal taxes.
In some instances, such as Bay Roberts and Clarke's Beach, the average increase in property values has spiked by 51 per cent and 42 per cent, respectively, a reflection of the robust economy on the Avalon Peninsula.
But some municipal leaders in the region are reassuring residents not to expect an equivalent jump in their tax bills.
Ches Ash, deputy mayor of the Town of Carbonear and chair of the finance committee, said council will very likely reduce the tax rate - known as the mill rate - to help ease the burden on property owners.
"I don't think I'm being too presumptuious in saying we will adjust downward," Ash stated recently.
The average increase in residential property values in Carbonear is 35 per cent, and the mill rate currenty stands at 9.25. This means a house assessed at $200,000 is charged $1,850 in property taxes by the town.
If the value of the same house has increased to $240,000, and the mill rate remains unchanged for 2013, the tax bill increases to $2,220.
What's the mathematical formula for calculating this? Multiply the mill rate by the assessed value, and divide it by 1,000.
Ash said council is doing a detailed assessment of the town's financial needs, and expects to decide how much it will reduce the mill rate by mid-November. The town's 2013 municipal operating budget is expected to be finalized by early December, Ash explained.
He said council adjusted the mill rate downward during last round of assessments, when the values increased by 17 per cent.
Ash dismissed any suggestion that the town might use the new assessments as a cash grab. He said municipalites are required to operate with a balanced budget, and can only take in as much revenue as it needs.
He said Carbonear is in a healthy financial position, though he acknowledged that costs are increasing, and revenues will have to increase as well.
"We're not desperately in need of cash. Our cash flow is pretty good. We are managing very well in terms of our capital works and improvements to infrastructure and providing services to residents."
The town collects about $4 million annually in taxes and fees, with about $1.5 million from residential property taxes and some $500,000 in commercial property taxes.
He said those figures will increase, but pointed out some of it will come from growth in the residential and commercial sector.
But with only one mill rate for all homeowners, it's fair to say there will be some winners and some losers. Homeowners whose property values increased well beyond the average will see a bigger increase than those at the other end of the scale.
