The Government of Alberta has finalized its recommendations for its changes to the assessment model for regulated oil and gas properties, including wells and pipelines.
The government proposed these changes to enhance the competitiveness of large multinational oil and gas businesses, however, the County of Wetaskiwin strongly opposes all the proposed changes and scenarios for rural municipalities presented.
In the Rural Municipalities of Alberta (RMA)’s Assessment Model Position Statements they say, “Under the scenario favoured by the oil and gas industry, the average rural municipality will lose over 12 per cent of its revenues in 2021 and 10 municipalities will lose over 20 per cent of their revenues.”
As rural municipalities have limited ways to generate revenue, if the Government of Alberta significantly reduces property assessments municipalities will be forced to increase residential and non-residential tax rates, reduce service levels, eliminate staff positions, and possibly consider dissolution.
“When combined with increased policing costs, reduced grant funding, and COVID-19 related property tax deferrals, many rural municipalities will lack the ability to adapt to the revenue reductions that will be the result of the scenarios proposed by the Government of Alberta.”
Based on the scenarios presented the County of Wetaskiwin would face revenue shortages of anywhere between $1.9 million and $3.8 million from the proposed changes. This data only evaluates a single-year scenario.
With these changes, in order to maintain the same level of services throughout the county of Wetaskiwin, the County would have to consider raising the residential mill rate (taxes) between 35.5 per cent (best case scenario) and 70.7 per cent (worst case scenario).
In addition to the rise in taxes the County would also have to reduce services, including reducing County staff by up to 38 per cent or making cuts to other services such as investment in infrastructure and road and bridge maintenance.
“It is critical that each resident and business owner in the County of Wetaskiwin know about the proposal the Government of Alberta is considering that would change the assessment model for oil and gas wells and pipelines,” says County of Wetaskiwin Reeve, Terry Van de Kraats. “While we understand that these changes are intended to enhance the competitiveness of the oil and gas industry, they will have serious ramifications and potentially extreme negative consequences on the sustainability of our municipality and smaller businesses in the industry.”
In a letter to the Premier and Government of Alberta, the Reeve and County of Wetaskiwin Council stress that the proposed changes do not guarantee a positive economic impact for rural Albertans, either through job creation or investment to infrastructure, and the detrimental affect that these changes will cause the County and its residents.
“The County cannot stress enough our disappointed [sic] in that this review has occurred with extremely limited transparency and direct consultation,” the Reeve states in the County’s letter. “Neither the County nor any other rural municipality were directly included in this year-long process. Given the far-reaching and wide-ranging negative consequences that will arise for rural communities if any of these scenarios are adopted, it is frankly unacceptable for municipalities to be given such a limited window of opportunity for comment.”
In an interview with 630 CHED on August 4, 2020, the Reeve said out of the four scenarios presented by the government, the best case scenario would result in $1,000 raise to an average household’s residential tax annually.
The Reeve says that these impending proposed changes have caused the most stress for him that he has experienced in the past ten years.
The County hopes to meet with the Government of Alberta to raise their concerns in person and create alternative scenarios. The County has already spoken to local MLA Rick Wilson and hopes to speak to MLA Jason Nixon these week.