Rural municipalities across the province, including the Municipal District (MD) of Pincher Creek, are concerned about the Alberta government’s proposed changes to the assessment model for oil and gas properties.
The provincial government has announced it would implement these changes around the end of August after a year-long review to provide relief to Alberta’s struggling oil and gas sector.
There are four different options that the government could move forward with, all with the intent of greatly reducing the assessed value of oil and gas property. The hope is that by lowering operating costs for oil and gas businesses, it will give them a better chance to prosper.
All four options would have a major impact on rural municipalities such as the MD of Pincher Creek.
The Rural Municipalities of Alberta (RMA), who represent 69 counties and municipal districts in Alberta, has been opposed to any of the options and have let the government know throughout the review process that the Alberta government has not considered how municipalities will be impacted by the changes.
Based on the change/scenario favoured by industry stakeholders, the RMA has stated that an average rural municipality would lose 12.4 per cent of its revenues in the first year of implementation, with 11 RMA members losing over 20 per cent. Collectively, rural municipalities would lose over $290 million in 2021 alone under the industry-supported scenario.
Also, the RMA has stated that the proposed changes would only help the largest oil and gas companies, and that more than half of smaller – less than $100 million – oil companies in the province would see an increase in their assessment.
The MD of Pincher Creek would have a tougher time maintaining infrastructure and providing services to its citizens.
In a letter to local MLA Roger Reid the MD made note that with the proposed changes the municaipality would see a reduction in its overall assessment of $110 million, reducing tax revenue by approximately $1.2 million.
MD of Pincher Creek reeve Brian Hammond says these changes will have a huge impact on the MD’s ability to provide services to its citizens and also could make the MD look again at its contribution to the Intermunicipal Collaboration Framework and Pincher Creek Community Early Learning Centre.
“Where does the shortfall come from? Does it come from increased taxes? Does it come from reduced services? Does it come from reduction in staff? The list goes on and it could impact the levies that we pay for school and for emergency services and our seniors lodge,” he said.
Hammond then said all these things will need to be looked at once a final decision is made by the provincial government. He has heard that it will be staged in over a period of time, but that he has not received information on the timeline for that.
“The ultimate impact will be on our ratepayers,” said Hammond.
“There are different rates for different classes of assessment and the residential property tax is quite significant, less so of perhaps agriculture, so that leaves our linear and industrial, and are there implications in there for the wind industry and renewables in terms of extending that protection?”
Another concern that the reeve has is that that smaller oil industries won’t benefit from reduced assessment.
“Who is going to carry the ball? If it comes back to the common denominator, which is the landowner/property owner/municipal taxpayer, then that is a huge concern for us,” said Hammond.
The reeve is asking all residents to help out and to reach out to Reid and members of the government as the decision from the provincial government will most likely be made by the end of the month.
“There is a real concern out there across the entire province, especially for our rural jurisdictions where linear machine equipment and assessment is a huge part of their tax revenue. Millions and millions of dollars will be lost because assessment has been written down, so it’s a huge impact and I think everyone in our business at the local level has tried to bring this to the attention of the government, and if people want to voice their concern please contact MLA Reid, or members of the government,” said Hammond.