Central Alberta rural elected representatives travelled to Edmonton on Thursday to protest a provincial government proposal to give tax breaks to the energy industry at the expense of municipalities.
Rural municipalities say if the government follows through with its plan, taxpayers in the province’s counties and municipal districts will pay the price.
The Alberta government has spent the last year reviewing ways to provide relief to the province’s hard-hit oil and gas operators.
Among the proposals being floated are various changes to the way oil and gas operations are assessed, which in most cases, will sharply reduce the taxes they pay to rural municipalities.
A Rural Municipalities of Alberta report says the proposed reforms would cut revenues for municipalities between seven and 20 per cent on average — but up to 40 per cent in the worst case — depending on the scenario chosen.
The province has said it has made no final decisions yet.
Red Deer County Mayor Jim Wood said the most extreme proposal would require boosting residential taxes in his county by nearly 30 per cent to make up the difference.
“In Red Deer County, we have a lot of oil and gas infrastructure and this will significantly impact the county,” he said. “We’re very, very concerned.”
Wood and county manager Curtis Herzberg made the trip to Edmonton to join the protest spearheaded by Northern Sunrise County in the Peace River area that drew about three dozen rural municipal representatives from across the province.
“We’re trying to get the attention of the province and make them understand this is something that is absolutely not going to work for rural Alberta.”
While the oil and gas industry has been hurting, the answer is not to shift their tax burden on to rural ratepayers and businesses who are already feeling the impact of the province’s economic slump exasperated by the pandemic, said Wood.
“I believe this is an unfair download from the province of Alberta.”
Wood said there are better options available to the province, such as incentives or tax breaks on the income side, that would help the energy industry while not hurting municipalities.
Herzberg said the county will be hurt, but said it is fortunate to have a more diverse tax base than many rural municipalities.
For some rural jurisdictions, the government’s plan could be devastating.
“There are other rural jurisdictions, if this goes through at the worst level, they won’t be sustainable. We’ll be dissolving rural governments.”
County of Stettler Reeve Larry Clarke agrees the viability of some rural municipalities is at stake.
“If you review the effects of the province’s four proposed models on rural municipalities, as we have, you will see several of them would be forced to dissolve under any of these scenarios presented,” said Clarke, who participated in the protest with members of his council.
“It is clear: viability of municipalities was not considered.”
Clarke also believes the government’s proposals will hurt small- and medium-sized energy companies “which are the companies and families in our regions.
“If this government is bailing out the oil and gas industry, we need to ensure all Albertans are responsible for paying for this, not just rural.”
Rural Municipalities of Alberta president Al Kemmere said the government’s proposed moves will have a huge impact on rural municipalities and their urban neighbours.
“It’s in the hundreds of millions, the effect on our member municipalities,” said Kemmere, whose organization represents 69 counties and municipal districts.
Kemmere said some municipalities would have to double their residential tax rates to make up for lost oil and gas revenue.
“You can imagine, not only the lack of appeal for that, but it’s unsustainable. You can’t do that. The people are going to revolt.
“There are tools the feds and the province can use. But to use the property tax base, which is our only revenue stream we have, to strengthen the oil companies, is not the right tool,” said Kemmere, a councillor in Mountain View County.
The association is also concerned that there is nothing in the government’s proposal to recover taxes already owing municipalities, nor are there any guarantees that the money oil companies save will stay in Alberta.
The financial impact will not be limited to rural municipalities. Almost all have revenue-sharing agreements — such as pacts to provide recreational funding, as one example — and if the rural municipalities see their revenues cut significantly, their ability to help their neighbours will be threatened.
And if rural areas pay less in school taxes because assessments are reduced, other municipalities will have to pick up the slack.
“If this happens, it will not only hurt rural municipalities,” he said.
Lacombe County Reeve Paula Law said her council expressed its concerns to Lacombe-Ponoka MLA Ron Orr in a meeting on Thursday.
Besides the impact on the county — which has not yet been fully determined — it is questionable whether small- and mid-sized oil and gas companies will benefit from the government’s plan, which seems to favour the bigger players, she said.
Lacombe County is also concerned that the financial impact will get worse over time, further eroding an important revenue source.
“So future years could be even grimmer, unless the economy turns around,” said Law. “It has the potential to be even worse in the future.”