Why blame property assessments when the assessment is just one part of a simple mathematical equation which results in the residential property taxes homeowners pay directly and tenants pay indirectly?

If a municipality in New Brunswick wishes to freeze, limit or reduce the property taxes it collects then it merely has to freeze, limit or reduce its spending! It's that simple.

A municipal council estimates spending for the coming year and also decides how much of that spending will come from property tax revenues, both residential and commercial. The amount thus decided is divided by an amount representing the "real and true" value of all real property in the municipality (municipal assessment base). This calculation results in a municipal tax rate which when applied to a specific property's assessment results in the amount of municipal property taxes for that particular property.

If there is no growth in amount of spending from property tax revenues and the municipal assessment base grows, the mil rate would be less and an individual property tax bill might not grow even though the assessed value of the property may grow. If a property undergoes major renovations or substantial additions, one would expect its "real and true value" (and its property taxes) to increase.

In a prosperous and growing municipality the assessment base grows with new construction and development. In a prosperous and growing municipality the assessment base also grows with the effect of supply and demand on the sale of real property on the open market. In a stagnant or declining municipality, the opposite occurs.

Municipalities are compared and measured by the growth or decline of their municipal assessment base.
Property assessments should not be unfairly manipulated.

In my next blog post I'll point out the inequities that can result from "freezing" property assessments.