As taxpayers and state and local officials across the country struggle with property tax issues, one place they can look for a solution is British Columbia, Canada.
In the 1970s British Columbia Assessment was created as a quasi-public organization to make property tax assessments province-wide without being under the control of the provincial or municipal government taxing authorities.
Today BC Assessment is widely viewed as a model for assessment administration, both at home and abroad. Major problems that existed before the authority’s establishment have been resolved, and prior worries over efficiency, professionalism, impartiality, and uniformity have been laid to rest.
Basic school funding has been made equal per student. More revenue has been secured from land and land-related industries (coal, timber, mining, and telecommunications) to contribute to overall student education. Those sources had previously contributed little to school funding.
Several problems prompted the creation of BC Assessment.
British Columbia school districts and municipalities were hitting taxpayers with large annual tax rate increases because legislation more than 10 years earlier had frozen assessment increases. Some school districts had a large assessment base while other districts had a small base.
Funding varied from $1,100 to $4,800 per student (in 1970 dollars) depending on where they lived and the industries located in their area.
As cities incorporated, more assessment organizations developed. Each was an autonomous body establishing its own assessment criteria and executing the assessment function independent of the other. No standard valuation methods existed, and assessments were frequently challenged and often difficult to defend.
By 1973, with 140 independent real property assessment organizations in British Columbia, assessment and valuation problems and deficiencies had become a serious provincial crisis. Alarmed by the rising incidence of serious equity grievances, and pressured by property owners and the public sectors, government officials were compelled to take action and implement new and improved systems.
The provincial government adopted several measures:
- Eliminated the frozen assessment laws and reassessed property annually, allowing the increase in property values to fund schools without increasing the tax rates.
- Created a new assessment organization capable of appraising property impartially and reflecting increasing property values.
- Revised assessment legislation to require annual reassessment of real estate and natural resources.
- Revised the school funding formula so that all students have the basic funding necessary for a good education no matter where they live.
- Made assessments uniform and based upon actual market value. The property assessments form the basis for local, school, and provincial taxation while providing information to assist people when making real estate decisions.
The solutions were adopted after the government formed an all-party Special Legislative Committee on Assessment to explore remedies and propose recommendations to British Columbia’s annual assessment process. The committee recommended legislation be passed to create a completely independent assessment authority.
The Legislature’s Special Committee on Assessments stated, “This authority must be independent of taxing functions (either municipal or provincial) and its control must be such as will result unmistakably in complete independence.”
On July 2, 1974 the Assessment Authority Act and the Assessment Act reconciled the inequities in British Columbia’s property assessment and valuation process. The Assessment Authority Act also granted government the power to create a province-wide assessment authority.
Immediately, the British Columbia Assessment Authority began its work. Six months later, it had produced the province’s first completely impartial and independent assessment rolls and notices.
The authority’s budget was based on a small surcharge on the overall assessments it produced province-wide. The assessment function was taken away from the 140 municipal assessor offices that employed 765 staff. The municipalities applauded having the assessment function removed from their responsibility.
The reorganization reduced the number of offices to 18, each serving six to 10 municipalities. Staff was cut to 580. The new organization also allowed the development of a professional staff that applied sound appraisal principles to determine (1) land value, (2) total property value, and (3) building residual value.
The authority also developed a standardized computer system for property valuation and trained professional assessors who were able to reassess all property annually. This was important because over time land values tend to increase while building values decline. Assessment methods and changes were explained to the public in their annual valuation notices.
Today these offices produce annual market value assessments for more than 1.75 million properties in British Columbia with total assessed values province-wide of more than $1 trillion.
Ted Gwartney ([email protected]) went to British Columbia as a property tax consultant in 1973 and remained as provincial assessment commissioner and chief executive officer until 1986. He is now the assessor in Greenwich, Connecticut and president of The American Journal of Economics and Sociology. He will speak at the Council of Georgist Organizations Conference in Kansas City, Missouri, July 9-13, 2008.