Red Deer County hopes to recoup some of the nearly $5 million it is owed in back taxes through a provincial program giving shallow gas producers a break.
In an effort to give the struggling oil and gas sector some financial relief, the Alberta government has asked 15 municipalities to slash tax bills for shallow gas producers by 35 per cent.
To spare participating municipalities an unexpected budget hit, the province has offered to match lost tax revenue by reducing school tax requisitions by the same amount.
For Red Deer County, the tax break would have cost it $987,270 in lost taxes this year.
Some of the shallow gas companies eligible for tax relief have not, so far, paid all or part of their county tax bills.
Heather Surkan, director of corporate service, told council on Tuesday that $4.9 million in taxes — most of it connected to the oilpatch — has not been paid. Trident Exploration, which abruptly shut down in May, owes the county $2.35 million.
“I think the key thing is we are guaranteed to collect 35 per cent of (shallow gas company) taxes,” said Mayor Jim Wood before council voted unanimously to join the provincial program.
“We don’t know about the other 65 per cent.”
Wood said the “key message” to other ratepayers is that the tax relief is being driven by the province: “This is not a Red Deer County initiative.”
Coun. Dana Depalme asked if companies that receive the tax break will be required to pay what is left on their bill, and was told they won’t.
Municipal officials expect the province to make changes next year to how oil and gas companies are assessed for taxation purposes to further help the industry out by reducing their municipal tax bills.
Surkan said it is unclear how the county’s 2020 budget will be affected.
“We have no details at all regarding that, but we’re bracing,” she said.