Ponoka County is pushing back on provincial pressure dictating how it taxes residents and businesses.
The issue came to a head again recently when Alberta Municipal Affairs insisted that the county meet a provincial target that non-residential tax rates cannot be more than five times higher than residential tax rates.
County chief administrative officer Charlie Cutforth said the ratio policy was put in place after lobbying from the energy industry, which accused some municipalities of setting exorbitant tax rates for business and industrial compared with residential rates.
In Ponoka County, non-residential rates are 6.1 times higher than residential. But non-residential rates are lower than the provincial average, said Cutforth.
“It’s not like we’re gouging them to try to subsidize anybody else,” said Cutforth.
Ponoka County feels as if it is being penalized for keeping administration costs low and relying on growth to keep taxes low.
“We haven’t raised any taxes in this county since 2009,” he said. “As for the residential rate in the county, I’ve been here 35 years and we haven’t raised it once.
“Now, it is being dictated that we have to raise it,” he said.
“Then we take the heat from our residents and (the province) couldn’t care less. That’s what’s frustrating.”
Reducing non-residential taxes alone to meet the ratio does not work. If the county opts to reduce those taxes, residential taxes must go up to offset the lost revenue, he said.
The issue first came up several years ago but the province seemed to have put it on the back burner until January when the county received a letter from Municipal Affairs Minister Ric McIver noting the lack of progress and the need to do something.
In response, Reeve Paul McLauchlin fired off a letter to the province asking for an exemption from the ratio while pointing out the county’s “unique position” and its efforts to cut red tape and costs.
“The increase in residential development has each year allowed us to maintain the same tax rates, similarly growth in the energy sector in the county has made it possible to maintain the same tax rate as well,” McLauchlin wrote.
“If the province orders that we must comply then we respectfully request that Alberta Municipal Affairs direct how that is to be accomplished. Taxpayers in Ponoka County need to understand that it is the provincial government dictating the inevitable tax rate increase that will result.”
McIver responded earlier this month in a letter, saying that the ratio is necessary to ensure a “competitive tax climate” and municipalities must show progress on complying with the ratio or regulations could be passed forcing them to toe the line.
“I realize that this may require difficult choices and/or a reasonable amount of time to phase-in adjustments,” McIver wrote.
He added he will consider a “reasonable proposal for a phased-in approach, but there must be demonstrated progress to move toward and ultimately achieve compliance with the legislated requirements.”
In response, Ponoka County council reluctantly voted to raise the residential tax rate 0.5 per cent — which will add about $25 to the typical property tax bill. That changes the ratio, so non-residential taxes are about 5.8 times the residential rate.
Cutforth said similar increases would require over the next three years to meet the province’s target. Council has not yet decided on its future plans.