Assessment model hurts municipal coffers

By Sharon McLeay Times Contributor

There is an old saying that when one hand giveth, another taketh away.
The dust has just settled on municipal sustainable initiative (MSI) funding, and now the provincial government is decreasing municipal revenues taken from industrial assessments,to support the shallow gas industry.
Wheatland County Reeve Amber Link said the county is the fifth out of 15 communities in Alberta whose industrial revenue assessments are affected by the new shallow gas taxation and assessment processes.
The hit to natural gas companies from the downturn of export markets and pricing, compounded by municipal tax assessments, has led to shut-downs for many shallow gas exploration companies in Alberta. Calgary Trident Exploration closed its doors and handed 4,700 wells over to the province’s energy regulator that will cost the province $329 million in reclamation costs. Nine CEO’s of major natural gas providers appealed to Premier Jason Kenny in July for a formula that would ensure a balance to supply and capacity for the industry.
The province has responded with reductions on municipal tax assessments, which will be felt by many Alberta municipalities in their yearly budgets.
Representatives from Alberta Municipal Affairs met with municipal leaders in Three Hills to present the shallow gas tax relief initiative, and the tax assessment models that municipalities will use in the future for natural gas company assessments.
“The predominant message that was heard is that this is not predominately a property tax issue,” said Link.
Link said officials conceded that municipal viability and cash flow had to be considered while assisting industry projects. Link considered the model would impact rural and small municipalities the most.
“For the first year, these changes will be shouldered by all of Alberta; but in future years, it will be shouldered by rural Alberta,” said Link.
Wheatland County Councillor Tom Ikert asked what would happen if municipalities boycotted the measures and voted against them in their respective councils.
“The province has asked councils to vote on implementation; however, they indicated if too many councils refused it, it is likely the government would mandate it,” said Link.
Councillor Ben Armstrong felt it would be better if municipalities gave the ministry input before the implementation of the model. He stated that the Alberta oil and gas sector has a strong political voice and is seldom hushed in legislative decisions.
“It was made very clear that this was an Alberta government initiative that we were expected to facilitate,” said Link.
The government is implementing the measures this fall and Link said Wheatland County council would be making decisions soon around its impact on their budget.
Other municipal leaders voiced many concerns and Link said officials would take those concerns to the Alberta municipal minister.
“I think we can clearly anticipate that 2019 will be a net zero year for Wheatland County; in future years, assessments will decrease and we need to adjust.”
An education tax waiver will be given shallow gas companies after the first year of the assessment model implementation.
Link said there might be other industries to which the model will be applied in the future.
There are some details on the model that may be adjusted. Many municipalities would like to see some consistency with approval of licensing denied on non-payment of tax. Councillor Glenn Koester said he would like to see breakdown comparisons from other municipalities as a decision-making tool. Councillor Scott Klassen said that he would like royalty amounts taken into consideration.
“Obviously, it benefits the province if we are improving the sustainability of some of our energy companies, but we can’t do that by compromising municipal assisting ability,” said Link.