The Town of Baie Verte recently decided to change its method of calculating water taxes for schools, going from a flat rate to a per student ratio.
Mayor Gerald Acreman says town staff did some research and council agreed this would be a fairer means of taxation for everyone.
The issue came to the forefront with the construction of Copper Mountain Academy, a new kindergarten to Grade 12 school in the town. When it opens, which is expected this fall, it will replace two older schools in Baie Verte.
Acreman said if the town continued to charge a flat rate for water, it would lose half the revenue it now receives from the Nova Central School District, while still providing the same amount of water for the same number of students.
The rate the town decided on is $8.50 per student, which Acreman said amounts to about the same the board is paying now. The new school is expected to accommodate about 350 students.
"It's not about a tax grab or anything like that at all. It's just to bring it in line with where we are now," Acreman said. "It's probably fairer for the school board as well because, if the student population declines, the rate declines as well."
Water is a very expensive commodity, Acreman said. In the past four to five years, he said the Town of Baie Verte has spent about $3 million on the system and more tenders are being called this year for about another $1.5 million worth of work.
Water is pumped into a large storage tank and then gravity fed to the town. Acreman said the electricity costs alone to pump the water is more than $30,000 a year, then there's maintenance and human resources to operate the system.
While this issue now seems to be relatively straightforward in Baie Verte, throughout the province it's a complicated issue. It's actually hard to find two municipalities that use the same formula.
Municipalities are not allowed in this province to charge property taxes for schools, yet some towns are using mill rates of property value to arrive at an annual water tax fee.
Some charge a flat rate, some charge a dollar figure per student or per occupant and still others charge a flat fee plus a mill rate of assessed property value or a mill rate alone. The Town of Gander charges commercial buildings and properties "exempt" from property taxes a rate of six mills of the assessed property value for water taxes.
In 2008, this became a sore point for the Nova Central School District as can be seen in the minutes of a board meeting on Jan. 22, 2008. Some members voiced concern that this was the first time an invoice for services had been tied to property value.
Several other towns in the province charge as high as 6.5 mills of property value for water taxes in addition to a flat rate.
The City of St. John's seems to have one of the lowest rates. Bob Bishop, the city's director of finance, said an agreement was made with the province many years ago, which still today works out to about $4.39 per student. The City of Mount Pearl charges $8 per student.
Brian Shortall, executive director of the Newfoundland and Labrador School Boards Association, can recall this issue coming up in the past for discussion among school boards.
Shortall said the different formulas can be problematic for boards in assessing their expenditures, especially when their schools are in several different municipal jurisdictions.
But another interesting aspect of all this is, in the end, it's the provincial government that foots the bill for all these water taxes.
Shortall said when each school district builds its budget, this expense is submitted to the provincial government for funding, much the same as heat, light and other utilities. The boards get the money back from the province in the form of operating funds or grants.
A Department of Education spokesperson confirmed that the province pays the water tax bills for schools and said the total fees paid for the fiscal year ending June 2009 was approximately $1.4 million.
A spokesperson with the Department of Municipal Affairs said that department is aware of concerns regarding inconsistencies in water taxes for schools and a review is currently underway.
Section 131 of the Municipalities Act, 1999, permits towns to levy upon schools, hospitals, and Crown buildings, a water and sewer tax "at a rate or amount that is the same as that charged to other similar properties in the municipality."
The government official said municipalities may charge the water tax by using "a fixed rate, mill rate (based upon property assessment value), or a metered rate (based upon actual consumption)."
In 2005, an amendment to the Municipalities Act provided the minister with the authority to make regulations limiting the rate and/or amount of water and sewer tax that may be charged by a town to a school, hospital or Crown building. However, to date, the spokesperson said, this authority has not been exercised.
Water Tax Facts:
Throughout Newfoundland and Labrador, there's no uniform formula for charging schools water taxes. Below are some examples, obtained directly from municipalities or from their websites.
- Bonavista - $4.25 per school occupant;
- Burgeo - $125 plus 6 mills of assessed property value;
- Carbonear - $125 plus 6.5 mills of assessed property value;
- Deer Lake - $1.53 per 1,000 gallons is charged for public buildings including schools;
- Gander - 6 mills of the assessed property value is the water tax for commercial buildings and properties exempt from property taxes;
- Marystown - A flat fee plus 6 mills of assessed property value;
- Mount Pearl - $8 per student;
- Stephenville - $5 per student enrolment;
- St. John's - an agreement with the province many years ago provides the city with about $4.39 per student.