Committee to consider options to adjust distribution of municipal property taxes due to new property valuations

Saskatoon has some of the lowest municipal property tax levels in Canada due to its prudent fiscal management and relatively diverse revenue mix.  In 2024 for example, a residential property owner would pay about $6.35 for every $1,000 of assessed value while non-residential properties would pay about $10.35 for every $1,000 of assessed value.

Saskatoon is among the very few cities that set an explicit tax ratio as the preferred approach to distribute the tax burden between residential and non-residential properties needed to fund City services. The current Tax Ratio Policy in Saskatoon, first approved by City Council in 2017 and maintained in 2021, set a tax ratio of 1.59 to 1 (or 1.63 to 1 after including commercial appeal contingency). This means that for every $1.00 in property tax paid by a residential property owner, a non-residential property owner paid $1.63 on an equivalent assessed value.

“It’s important to note that the City does not collect any additional property tax revenue because of reassessment or tax policy decisions such as the tax ratio. These changes and decisions result in a redistribution of the overall property tax shared amongst property owners,” says Clae Hack, Chief Financial Officer. “While individual properties may be impacted with property tax increases or decreases, overall, no new property tax revenue is generated from these changes and decisions for the City. In other words, the tax pie stays the same size but the way the pie is divided is what shifts.”

After the provincially legislated 2025 Reassessment, the Standing Policy Committee (SPC) on Finance on February 5, 2025, was briefed on the changes to property values, notably that residential properties assessed value in Saskatoon increased by 13%, on average, while assessed values for non-residential properties decreased, on average, by 2%. These results are reflective of the market conditions as of January 1, 2023.

Due to the relative increase in residential property values and a relative decrease in non-residential property values from the 2025 reassessment, the property tax ratio would have to adjust to collect the same amount of tax revenue from both residential and non-residential sectors.  To achieve this, a ratio of 1.88 to 1, the revenue neutral ratio, would be required to maintain the same distribution of the municipal property tax burden for both property classes.

As outlined in the report heading to the March 5, 2025, SPC on Finance meeting the Administration is recommending a tax ratio of 1.75 to 1.  Some of the reasons this ratio is being recommended include:

1. Splitting the difference between the existing ratio of 1.63 (including commercial contingency) and the revenue neutral ratio of 1.88 acknowledges the shifts in value the City is seeing between residential and non-residential from reassessment while at the same time offers some level of smoothing to avoid significant shifts between the classes;
2. This decision is consistent with past Council decisions where the City has lowered the ratio from 2.41 in 1998 to 1.63 in 202, when the City was seeing larger commercial value increases as compared to residential.  In this reassessment cycle, as residential values are seeing larger increases than non-residential values, it is consistent to have a corresponding movement in the ratio to minimize significant shifts as in the past;
3. At a 1.75 ratio, Saskatoon will continue to have one of the lowest property tax ratios and rates in western Canada, the city would maintain a competitive edge in terms of non-residential property taxes ; and
4. Even with an increase in the ratio to 1.75, many non-residential properties within Saskatoon will see a decrease in their property taxes. In 2024, the City collected 32% of its total property tax revenue from non-residential properties; with the proposed recommendation of a 1.75 ratio, this will fall to 30.7% in 2025.  This means that overall, the City will collect less from non-residential properties in 2025 than it did in 2024.  As 1.88 is the revenue neutral ratio, anything below this amount will still see a shift from commercial properties to residential.

At the SPC Finance Committee’s next meeting on March 5, 2025, Committee will be presented with five tax ratio approaches/options for consideration. The options presented by Administration differ in terms of property tax implications for the various property classes. There will be some trade-offs if Council decides to redistribute the municipal property tax burden amongst property classes. Council will review all tax ratio policy options presented, including Administration’s recommendation to adopt Option 3, which sets the non-residential (commercial) to residential tax ratio at 1:75 to 1 for the years 2025-2029. As noted, a 1.75 to 1 tax ratio would still be among the lowest in Western Canada, and the effective tax rate on non-residential would also remain one of the lowest in Canada.

“There is no perfect answer to what the City’s tax ratio should be,” Hack adds. “There are multiple considerations that go into this decision including the impact of the 2025 reassessment, how competitive Saskatoon’s residential and non-residential property tax rates are compared to other major western Canadian cities and overall principles around how much each property class should contribute to the City’s operational requirements. Overall, I am confident Committee will consider all implications to make its best decision.”

Visit saskatoon.ca/propertytax