By Trevor Busch
With the province contemplating drastic changes to tax assessment for municipalities in relation to oil and gas, the Municipal District of Taber may suffer a $3.1 – $4.1 million hit to their annual revenue, and their elected representatives have been sounding a warning about potential implications for the future.
“The MD of Taber is opposed to these assessment model changes, which has the potential to significantly change our fiscal reality and could ultimately affect your municipality as well,” said MD of Taber Reeve Merrill Harris in an Aug. 7 letter to Mayor Andrew Prokop. “In the spirit of partnership, the MD of Taber council invites you and your colleagues…to engage with your respective MLAs in an effort to voice your concerns and potential opposition to these proposed changes.”
Proposals for change in the assessment model for oil wells and pipelines presented recently by the province could have a profound impact on taxpayers in the MD of Taber.
“(To) put into perspective the gravity of these changes, the MD of Taber would be required to increase its residential tax rate by between 100 and 130.1 per cent; it’s non-residential tax rate by between 36.2 and 52.8 per cent, as well as implement extreme operating budget expense cuts and reductions,” continued Harris in his letter.
All told, if the assessment model changes are adopted, the MD is projecting an annual reduction in property tax revenue of between $3.1 – $4.1 million.
“If the above were to become reality, the MD of Taber may be forced to enact a combination of all three changes, implement service level reductions and seriously revisit its ability to contribute to inter-municipal cost sharing and shared service initiatives,” concludes Harris in his letter. “These changes will impact not only the MD of Taber and the services we provide to residents and businesses, but will pose risk to the entire region.”
At town council’s Aug. 17 meeting, a delegation headed by Reeve Merrill Harris, which included Councillors Tamara Miyanaga, Brian Brewin, John Turcato and CAO Arlos Crofts, presented the town with information related to the impact of potential assessment model changes from the province and their relation to the MD of Taber and region.
“Raising tax rates to offset the impacts the assessment model changes will have the effect of simply transferring taxes from industry to other businesses and residents,” said Harris. “This abrupt change to the assessment model will force municipalities to enact a reduction in service levels and possibly collaborative inter-municipal agreements. The above mentioned tax rate increases are not realistic. These changes will not only affect the MD, but in fact the entire region.”
Collecting taxes from the oil and gas sector has been a tricky proposition for the MD in recent years, forcing them to write off millions in lost revenue.
“Over the past 3-4 years, the MD has had to write off close to $5 million in unpaid taxes, largely from the oil and gas industry, and this year we’re looking at possibly another $1 – $2 million that won’t be paid due to the oil companies choosing not to pay their taxes. There’s nothing in the Alberta legislation that has teeth to force them to pay their taxes.”
Harris pointed to the Seniors Housing tax requisition as an example of how the assessment changes could impact municipalities that source only small percentage of revenue from oil and gas.
“Things such as senior’s housing will be affected. The amount that each municipality is requisitioned is based off of an equalized assessment. A $400 million drop in the MD’s assessment base — and that’s what is being proposed — will change the amount that the Town of Taber, Town of Vauxhall and Village of Barnwell will need to contribute just in that area, in senior’s housing. Other scenarios will be cuts to the level of service the MD provides its citizens, as well as clawbacks on the amounts that we transfer to our urban neighbours. Basically, everything will be on the table.”
Harris concluded by asking council to support the MD in lobbying the Alberta Urban Municipalities Association (AUMA), local MLAs and government to prevent the proposed changes. Coun. Joe Strojwas wanted to know how other municipalities not reliant on oil and gas are managing to collect their taxes in Alberta.
“I appreciate the financial situation you’re facing, but there are a number of rural municipalities that don’t have access to revenue from oil and gas companies — the MD of Taber has had that luxury for a number of years. The other municipalities are surviving and continuing to go on. Do you have access to collaboration with them to see how they’ve managed to collect their taxes that aren’t dealing with oil and gas companies?”
Harris indicated the MD of Taber is only a mid-range player when it comes to reliance on tax revenue from the oil and gas sector.
“There are certainly some municipalities that don’t rely on it the way that the MD of Taber does, but there are municipalities that are even more reliant on the oil and gas sector for their municipal revenues. There’s municipalities that are going to be hurt way worse than we are. Tax rates are how those other municipalities might be able to make up the difference, and it can be seen if you examine other municipalities there’s certain aspects of their tax regime that are way higher than the MD of Taber.”
Strojwas went on to inquire if increased taxes in the MD would bring theminto closer alignment with tax rates in other parts of the province.
“In fact, our rates are on par with a lot of other municipalities,” replied Harris. “There’s some where certainly the farmland rate would be higher than ours. But I think we’re on par with a lot of municipalities around us. We’re not the low man on the totem pole, that’s for sure.”
Coun. Brian Brewin suggested the changes will impact recreational funding.
“A lot of these municipalities that don’t have the oil revenue also don’t give a lot to recreation or others in the neighbouring municipalities…we’ll survive, yes, but there will be less money going around for other things, and that’s why we’re here today to talk to you about it, so you’re aware.”
While Harris wants to see the oil and gas sector succeed, he argues it shouldn’t be loaded on the backs of local taxpayers.
“We’re not opposed to helping the oil and gas industry get back on their feet, we’re just not sure that downloading all of this onto the municipality is the right direction to go. Perhaps there’s other policy options that the government can look at — through royalties, or corporate tax breaks, whatever — that’s not downloading onto rural municipalities.”
Following discussion, town council voted unanimously to accept the correspondence from the MD of Taber related to potential impacts of assessment model changes for the MD of Taber and region. But debate quickly shifted to the need to formalize the town’s support of the MD.
“I’m of the expressed opinion that a letter of support is of course obvious, but I also think we need to be lobbying our MLA, Grant Hunter, and anybody else we can, because the MD is going to be faced with some serious financial questions that is going to serious affect us also,” said Coun. Louie Tams. “So I think we need to give our neighbours across the hall our full support and lobby whoever we can and help them with this, because it’s going to become a burden on all of us.”
Coun. Joe Strojwas was lukewarm about the idea of a letter of support, arguing the numbers from the province have not yet been formalized and no decision has been made at this time.
“They’re asking for too much change too fast,” said Tams. “If we turned the cards over and it was $3.1 million hit to the Town of Taber — between $3.1 and $4.1 (million) — it would be virtually impossible for us to absorb that without massive tax increases. And I totally agree with their perspective — can you please lobby, we need some more clarification, you can’t just change this and dump this all on municipalities. Because they’re going to get through with the rural municipalities, and guess who’s next? It’s going to be the urban municipalities.”
Coun. Garth Bekkering agreed.
“I also believe that’s what’s happening here — in my mind — is a transfer of taxes and assessment from one entity, the oil and gas companies, to another entity, the rural municipalities of Alberta, and I just don’t think that’s fair. We can argue all day and all night about should farmers pay more taxes on the land or residential in the MDs and counties…I don’t know. But to transfer assessed taxes from one entity to another entity, I don’t think is fair.”
Council voted 6-1 in favour of issuing a letter of support for the MD. Strojwas opposed the motion.
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