New Brunswick municipalities are welcoming the province’s move to overhaul the property tax system.
A consultation and engagement process is underway, beginning with a public survey that is available until Aug. 10.
Brittany Merrifield, president of the Union of Municipalities of New Brunswick, said the system is long overdue for an overhaul.
“We’re very grateful to see that step forward by the provincial government,” Merrifield, who is also the mayor of Grand Bay-Westfield, told our newsroom.
“That comes with a caveat, however. Municipalities need to be consulted as equal partners in the process.”
Record real estate growth has led to major increases in property values and, in turn, higher property taxes in recent years, said the province.
Both the assessment and property tax systems will be reviewed as part of the overhaul process, and the province said reform options will be considered.
More diversified funding needed
Merrifield said one thing her organization wants to see is more diversified funding for local governments across the province.
She pointed out that municipalities get around 85 per cent of their funding from property taxes, and there is a limited number of tax classes they can have.
“We have residential, non-residential, heavy industry. We’re hoping to have some more flexibility so that not only does it give us other avenues for property tax revenue, but it also allows us to help develop our communities in ways that are best suited to each community,” said Merrifield.
“We’d also like to see an untethering of the residential and non-residential tax classes so that if we’re looking to make things more affordable for our residential ratepayers, that industry doesn’t also necessarily get that break as well.”
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Merrifield said the province has taken a “great first step” on municipal fiscal reform with a new funding model, which will see local governments receive $138 million next year, up from $63 million this year.
$75 million has been earmarked for a Fiscal Capacity Fund. It will provide municipalities with a new equalization fund designed to support local governments in need.
Regional service commissions will receive $18 million — an increase of $3 million —to help implement their regional strategies. The remaining $45 million will go toward a new fund aimed at supporting the improvement and replacement of existing municipal infrastructure.
Worries about assessment freeze
However, Merrifield said there is worry among municipalities about a one-year assessment freeze in 2026 which will impact about 430,000 property owners around the province.
“I don’t know a mayor or councillor that isn’t concerned about affordability for our residents, but we’re also concerned about how we’re going to manage rising costs and what that’s going to mean,” she said.
“Does it mean that the mill rate is going to go up or does it mean we’re going to cut services? There was no consultation prior to the freeze being implemented, and it took us pretty much all by surprise.”
Merrifield said this is why it is so important for the province to consult with local governments as part of the overhaul process.
The organization has struck an internal advisory committee which will work on developing a position paper over the coming months.
“We don’t want to pull one string and end up pulling another string that we didn’t mean to pull. We want to make sure we’re advocating for things that aren’t going to have unintended consequences.”
