Rural Municipalities of Alberta says its members need more power to make oil and gas companies pay their taxes. Photo by PAUL COWLEY/Advocate staff

Rural Municipalities of Alberta says its members need more power to make oil and gas companies pay their taxes. Photo by PAUL COWLEY/Advocate staff

Proposed oil and gas assessment changes could have big impact on municipal revenues

Croup representing urban municipalities is concerned about the outcome

By Masha Scheele, Local Journalism Initiative Reporter, The Hinton Voice

The Government of Alberta is proposing property assessment model changes, which could have negative effects on revenues of municipalities across the province, according to an impact report from Rural Municipalities of Alberta (RMA).

If implemented, any of the four proposed scenarios would change the method of assessing oil and gas properties. Overall municipal tax revenue loss for Yellowhead County could be roughly 26 per cent based on 2020 tax rates, stated a report from County administration.

The various potential changes could require Yellowhead County to increase the residential tax rate by between 16.3 per cent and 350 per cent, or the non-residential tax rate by between 1.3 per cent and 36.5 per cent.

In reality, the County may be forced to enact a combination of both changes, as well as reduce service levels and intermunicipal collaboration agreements.

In the scenario favoured by the oil and gas industry, the residential mill rate increase could go up by 350 per cent. The proposed changes mean reduced assessment values and taxation revenues from regulated properties such as oil and gas wells and pipelines.

“Our first concern is the time allotted by the provincial government for review and feedback regarding this assessment. Yellowhead County feels the short time-frame afforded to us is not enough time to do a comprehensive review of the content, as well as the addition to the lack of communication from the provincial government to both the affected municipalities and their residents,” stated Stefan Felsing, senior communications and marketing coordinator.

The provincial government is accepting input on the proposed assessment models from municipalities and other interested stakeholders within the next 30 days. Felsing added that the county has sent out letters to the Premier, various ministers, and both local MLAs.

In addition, they are sending letters to the mayors of the Town of Hinton and the Town of Edson.

Wells, pipelines, and other oil and gas equipment would be affected by the changes with no mechanism to require the industry to re-invest their savings into Alberta through job creation or capital investment, stated the RMA. The oil and gas industry would save the same amount that municipalities will not be collecting in tax revenue, stated a letter from Al Kemmere, president of RMA.

“Under the four scenarios proposed by the Government of Alberta, Alberta municipalities will lose between $109 million and $291 million in tax revenue in 2021, with likely increases each year as assessable property depreciates,” stated the RMA position statement.

Yellowhead County stated in their report that it is among 10 municipalities predicted to lose more than 20 per cent of its revenue.

Hinton and Yellowhead County have a revenue and cost sharing agreement that would be placed in jeopardy. The amount given to Hinton is currently about $2M through the agreement.

The County states the agreement stipulates that if the province changes legislation or regulations that negatively affect the revenue of the County by more than $1M, the agreement may be terminated.

Felsing said most of the County’s budget goes to infrastructure, with the majority of that being road development and maintenance, which supports local resource industries. There are currently more than 2,000 km of gravel roads and approximately 250 km of paved roads in the County.

The group representing urban municipalities (AUMA) has been involved in the review and is aware of the impacts to their members and concerned about the outcome. Libraries, cemeteries, culture, and community groups would also see a reduction in funding. Evergreens Foundation is also supported by Yellowhead County through a requisition for operating and capital costs.

The Yellowhead County requisition provided $4,176,948 to the Evergreens Foundation in 2020.

A decrease in Yellowhead County revenues would either result in decreased spending by Evergreens or an increase in the tax rate, stated the County’s report.

“As evidenced in the recent pandemic this is a highly vulnerable sector of society and decreased spending could have a significant impact on their viability,” it read.

RMA also stated that the only groups that win in every scenario are the largest oil and gas companies operating in Alberta, many of which have holdings worldwide and would be under no obligation to reinvest savings in the province. This means the assessment model review is not meeting its mandate of enhancing competitiveness and supporting municipal viability, but reducing assessments for the largest and most well-connected companies on the backs of small oil and gas producers and municipalities, according to RMA’s report.

The county reported that over the last two years they had seen a significant spike in unpaid taxes and these are primarily from the oil and gas industry.

“If the rate of increase that has been seen in the last two years continues, and there has been no indication of improved collection to date, then the 2020 noncollectable could be in the range of six to eight million dollars,” the report read.

If assessment to smaller oil and gas companies are also increased, the numbers filing for creditor protection may increase and along with that uncollectible taxes will increase. The oil and gas industry has also demanded that municipal tax rates be frozen, stated the county’s report.

Reduced funding would also mean reduced staff and a review of all services. No changes to the model have been finalized to this point and provincial decision-makers, including ministers and MLAs, are currently reviewing the various options.

Any final decisions on changes will likely be made in late August and implemented for the 2021 municipal fiscal year, stated the RMA.

Yellowhead County and the RMA is actively advocating to ministers and rural MLAs across the province for additional changes.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A nurse gets a swab ready at a temporary COVID-19 test clinic in Montreal, on Friday, May 15, 2020. Health Canada has reversed course on home test kits for COVID-19, saying it will now review applications for such devices. THE CANADIAN PRESS/Paul Chiasson
Employee at Bethany CollegeSide in Red Deer tests positive for COVID-19

An employee at a Red Deer continuing care facility has tested positive… Continue reading

The Government of Alberta has identified 1,828 new cases and 15 new COVID-19-related deaths, which brings the provincial death toll to 590. (File photo)
Alberta identifies 1,828 new COVID-19 cases on Friday

Central zone has 1,251 active cases

Higher sales of cannabis helped Canadian farmers come out in the green. (Black Press Media File)
Drumheller RCMP lay charge for unlawfully distributing cannabis

A joint forces investigation involving the AGLC investigation team partnered with Drumheller… Continue reading

Three weapons have been seized and four people are facing charges following a police operation in central Alberta. (Photo contributed by RCMP)
RCMP, Lacombe Police seize loaded guns, arrest four people

Four people have been arrested and multiple prohibited firearms are off the… Continue reading

The Salvation Army's 2020 Christmas Kettle Campaign includes a new $5 tap feature for pandemic-friendly donations. (Devon Bidal/News Staff)
Salvation Army officers safe, touchless options for Kettle donation this year

The Salvation Army in Red Deer needs help. Kettle donations are needed… Continue reading

Dan Cochrane, senior pastor at CrossRoads Church. Contributed photo
CrossRoads Church closes its doors for two weeks after staff member tests positive for COVID-19

CrossRoads Church made the decision to cancel in-house services for two weeks… Continue reading

Montreal Alouettes' Michael Sam is set to make his pro football debut as he warms up before the first half of a CFL game against the Ottawa Redblacks in Ottawa on Friday, Aug. 7, 2015. Sam became the first publicly gay player to be drafted in the NFL. He signed with the Montreal Alouettes after being released by St. Louis, but abruptly left after playing one game. THE CANADIAN PRESS/Justin Tang
Study finds Canada a “laggard” on homophobia in sports

Study finds Canada a “laggard” on homophobia in sports

Canada's Kadeisha Buchanan (3) and Mexico's Jacqueline Ovalle (11) battle for the ball during a CONCACAF women's Olympic qualifying soccer match Tuesday, Feb. 4, 2020, in Edinburg, Texas. THE CANADIAN PRESS/AP-Delcia Lopez
Lyon defender Kadeisha Buchanan named Canadian Women’s Player of the Year

Lyon defender Kadeisha Buchanan named Canadian Women’s Player of the Year

Winnipeg Blue Bombers' Andrew Harris celebrates his touchdown against the Hamilton Tiger-Cats during the first half of the 107th Grey Cup in Calgary, Alta., Sunday, Nov. 24, 2019. Running back Andrew Harris, who was instrumental in the Winnipeg Blue Bombers ending their Grey Cup drought in 2019, tops the CFL team's list of potential free agents. THE CANADIAN PRESS/Nathan Denette
Grey Cup MVP, top Canadian Harris among Winnipeg Blue Bombers potential free agents

Grey Cup MVP, top Canadian Harris among Winnipeg Blue Bombers potential free agents

24Toronto Raptors' Fred VanVleet (23) goes up for a shot agains the Boston Celtics during the first half of an NBA conference semifinal playoff basketball game in Lake Buena Vista, Fla., Friday, Sept. 11, 2020.. Watching Connor McDavid let a slapshot fly or Fred VanVleet sink a deep three can be a salve to the soul of a sports fan run down by the difficult realities of the COVID-19 pandemic. THE CANADIAN PRESS/AP-Mark J. Terrill
Bubbles are best: experts say return of sports risky as COVID-19 pandemic continues

Bubbles are best: experts say return of sports risky as COVID-19 pandemic continues

Coastal Carolina's Grayson McCall (10) scrambles past Texas State's Nico Ezidore (95) during the first half of an NCAA college football game in San Marcos, Texas, Saturday, Nov. 28, 2020. THE CANADIAN PRESS/AP-Chuck Burton
BYU presents tough challenge for Chanticleers, Canadian Makonzo this weekend

BYU presents tough challenge for Chanticleers, Canadian Makonzo this weekend

Meng Wanzhou, chief financial officer of Huawei, arrives at B.C. Supreme Court to attend a hearing, in Vancouver, on Friday, November 27, 2020. The U.S. Department of Justice is refusing to comment on media reports that its lawyers are seeking a plea deal of sorts with Chinese tech executive Meng Wanzhou. THE CANADIAN PRESS/Darryl Dyck
PM won’t confirm reports U.S. Justice Department seeking plea deal with Meng Wanzhou

PM won’t confirm reports U.S. Justice Department seeking plea deal with Meng Wanzhou

Alek Minassian is shown in a handout photo from his LinkedIn page. A psychiatrist retained by the defence will testify for a fifth consecutive day today at the trial for the man behind Toronto's van attack. Dr. Alexander Westphal says Alek Minassian does not truly understand the moral wrongfulness of killing 10 people, but says criminal responsibility is a legal opinion, not a psychiatric one. THE CANADIAN PRESS/HO
‘I know what I did was morally wrong,’ Alek Minassian told psychiatrist, court hears

‘I know what I did was morally wrong,’ Alek Minassian told psychiatrist, court hears

A look at what provinces and territories have said about COVID-19 vaccine plans

A look at what provinces and territories have said about COVID-19 vaccine plans

Most Read