TORONTO - Municipal property assessments issued this fall are "unrealistic" given the dramatic drop in the real-estate market, Ontario Premier Dalton McGuinty admitted Wednesday, but he made no move to spare homeowners across the province.

By contrast, British Columbia Premier Gordon Campbell last month announced a freeze of property assessments at 2007 levels to help people cope with the turbulence in property values, putting off new valuations until late next year.

At a year-end news conference yesterday, Mr. McGuinty instead called on municipal governments to recognize that the assessments are out of date as they prepare local property tax bills next year.

{sidebar id=6}"You would hope that municipal councils would act reasonably and responsibly given the circumstances and recognize that that perhaps was an unrealistic assessment," he said.

His comments came as the market for resale homes in the Toronto area showed deeper weakness in figures released yesterday by the Toronto Real Estate Board. The average sale price in the Greater Toronto Area dropped to $360,652 in the first half of December, down from $404,707 in the same period last year. In Toronto, the number of transactions dropped to 619, a decline of 56 per cent from the same period last year.

The Premier's remarks drew fire from opposition spokesmen and taxpayer groups, while Toronto officials expressed puzzlement.

"The comments of the Premier were ridiculous and show how far out of touch he is with the experience of Ontario families in an era of declining home values," said Conservative finance critic Tim Hudak, noting the Jan. 1 assessment was based on values a year ago when prices were high.

He and others said the onus now is on the province to direct its property-assessment agency to scrap the 2008 assessment, the first in several years, and start fresh in 2009.

"There's nothing municipalities can do; if it's unrealistic, it's unrealistic," said Bob Topp of the Coalition After Property Tax Reform. "Some people are going to have huge increases way out of line with what their properties are now worth."

Opposition parties charged that the Liberal government created the problem by freezing assessments for several years prior to the 2007 Ontario election - to avoid a backlash from homeowners - and then scrapping annual assessments in favour of a four-year cycle.

"Now people are hit with what, in effect, was a three-year combination all at once that doesn't reflect current economic circumstances," New Democratic Party Leader Howard Hampton said.

In Toronto, budget chief Shelley Carroll said the city "can only act on what is," namely current data from the Municipal Property Assessment Corporation.

She added the Premier's comments "don't indicate what he intends to do about [a possible change in assessment], and only he can do something about it."

Meanwhile, she said, the city still plans a "nice, modest" property tax of between 2 and 4 per cent next year.

Mr. McGuinty dismissed suggestions about capping rates, saying his government introduced a four-year phase-in to ease the impact of assessments on homeowners.

With files from Karen Howlett and The Canadian Press

JENNIFER LEWINGTON

From Thursday's Globe and Mail

December 17, 2008 at 10:50 PM EST