If you want to see how the stalled Trans Mountain pipeline project is messing with the provincial economy, just look at Red Deer County’s tax rolls, says Mayor Jim Wood.
As of the end of September, $6.6 million worth of outstanding taxes are on the county’s books — a $1.1 million jump from last year, when the issue was first raised as a concern by council.
About $1.4 million of the taxes owing is from pipelines, known as linear taxes. The rest is a mix of commercial and residential taxes.
“I think a lot of this can be blamed on the pipeline issue, not our pipelines in Red Deer County, but the pipelines that are needed to take the oil and gas over the mountains to new markets,” said Wood on Tuesday.
“So, what we’re seeing right now are depressed prices for our oil and gas sectors because of the lack of transportation for their products.
“Because of that, a lot of these companies are hurting, and when companies are hurting, it’s going to show.”
Unpaid taxes are where it is showing on Red Deer County’s budget spreadsheets.
Collecting unpaid taxes from the oil and gas sector can be tricky. Often, the company that originally received the tax bill has gone bankrupt, and its assets — and liabilities such as unpaid taxes — are taken over by the new owner.
Sometimes, the new company will pay the old tax bill — but not always.
And recovering linear taxes carries its own complications, because there is no asset that the county can seize and auction off to recover taxes.
“With a default on oil and gas linear taxes, we have limited means to collect,” he said.
“I don’t like to see the trend climbing.”
Unpaid linear taxes became a big enough issue that the province stepped in. A program was rolled out compensating municipalities for the school taxes they had to pay on behalf of delinquent companies.
Wood remains optimistic that most of the taxes will eventually be recovered — and bigger picture, that the Alberta economy will continue its steady climb upward.
Unpaid taxes from oil and gas companies have also prompted a legal fight. About a dozen Alberta municipalities — including Lacombe and Clearwater counties in Central Alberta — have taken legal action to have local governments declared secured creditors where linear properties are involved.
Alberta municipalities have been considered secured creditors when attempting to recover unpaid taxes from an insolvent property owner. However, a 2017 Alberta Court of Queen’s Bench ruling deemed municipalities unsecured creditors when it came to linear properties.
That status leaves municipalities far down the line when money becomes available.