By Shaun Penner

Looking for Balance

Rural municipalities sounding alarm over proposed oil and gas assessment changes

Aug 5, 2020 | 12:40 PM

Rural municipalities in the Peace Region and across Alberta are sounding the alarm about potential changes that would reduce municipal taxes for oil and gas companies, that could lead to steep property tax hikes for residents and businesses, or both.

Following a near year-long, provincial government-led consultation on how infrastructure like wells, pipelines, machinery and equipment is assessed, four scenarios were brought forward for the province’s consideration. All four of those proposals would in turn lead to a reduction in how much municipal taxes would be paid annually on that infrastructure, ranging from seven to 20 per cent.

Any of those changes could have a major impact on the budgets of many rural municipalities in Alberta, especially the smaller municipalities like Birch Hills County, which boasts a population of around 1,600.

The County estimates the changes could equate to a revenue loss of between $450,000 and $1.6 million annually, in a budget that sat at $5.7 million last year.

“In our case, worst case scenario is, our taxes could go up 115 per cent here in our municipality,” said Reeve Gerald Manzulenko.

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“We could lose some jobs. Also, our services might have to be cut. You know, there’s lots of different things at play here right now.”

This serves as another blow to Birch Hills, who earlier this year put out a call to those oil and gas companies who had unpaid property tax bills that totalled over $500,000 for 2019. Manzulenko says to date, they still haven’t been able to recover any of that tab.

“This is going to be kind of a double whammy for us,” said Manzulenko. “We still haven’t been able to collect any of those unpaid taxes.”

The reductions in taxes would come to an industry that has seen tough times over the last five years, especially now amidst the impacts of COVID-19. Manzulenko emphasized that he is a strong supporter of the industry and wants the sector to thrive, but not at the cost of downloading those costs onto ratepayers.

“I think everybody understands that we have got to get Alberta back to work, and of course the more people working, the more people paying taxes,” said Manzulenko. “But, it’s right now at the expense of the municipalities.”

That sentiment is echoed by Manzulenko’s neighbouring Reeve, Leanne Beaupre, as the County of Grande Prairie is also staring down a significant property tax hike, reduction in services, or both.

The County of Grande Prairie says these changes could lead to a residential property tax hike of up to 52 per cent.

“While we are strong advocates for the oil and gas sector and are proud of the many companies that call the County of Grande Prairie home, we are concerned that these options will put deep financial burden on County residents and businesses,” said Beaupre.

She adds that making such cuts would also not guarantee more companies would come to set up shop in Alberta, or re-invest those tax breaks into Alberta’s municipalities.

“The proposed municipal assessment models will have a major negative impact on our communities and could lead to tax increases, reductions in service, or both, and without assurance that there will be an increase in jobs and investment in the region.”

One municipality that suggests major tax hikes could be coming is Northern Sunrise County, near Peace River. In a news release issued last week, Reeve Carolyn Kolebaba says residents would face a tax hike between 223.4 and 512.1 per cent.

“If this proposed change is passed YOU WILL BE IMPACTED – financially through property taxes and in a loss of service from Northern Sunrise County,” reads a statement. “Many services provided by the County would have to be cut, County support to our neighboring municipalities (Town of Peace River and Village of Nampa) and organizations will have to be decreased or eliminated, and there would certainly be an increase in property taxes for residents and business within the County.”

With that concern, the Rural Municipalities of Alberta (the association representing rural municipalities in the province) has forwarded several amendments they hope will bring better balance to the issue, which Reeve Beaupre feels can be achieved.

“We are optimistic that the Province will hear our concerns and work to find solutions for industry that share in the cost and rewards of public investment, are sustainable, transparent, and most importantly, guarantees results in terms of jobs and investment.”