M.D. revenues could suffer under province’s wells, pipelines in assessment overhaul

The M.D. of Bonnyville is concerned that the provincial government’s change to assessment on oil wells, pipelines, and machinery could hurt the municipality’s revenues by 20 per cent.

The Alberta government establishes the tax formula that oil companies pay to municipalities.

A technical review of the assessed values of these oil and gas-related assets was done at the end of 2019 and now the provincial government are engaging with municipalities and industry before final decisions are made.

In a Jan. 2 letter sent to Reeve Greg Sawchuk, the Minister of Municipal Affairs Kaycee Madu said the initial results “indicate potentially significant shifts in assessment.”

“This is pretty concerning for us because the early numbers being put out there as to the changes to this assessment is that they will allow a greater depreciation of these items down to the 10 per cent level,” said Reeve Greg Sawchuk on The Morning After.

“As far as revenue goes, for us, we don’t know what the numbers are going to be. Speculation is it could be 20 per cent. So that’s a 20 per cent revenue hit for the M.D.”

The change in assessment would also effect the region as a whole with the potential for change to ID 349.

The ID 349 money, which is currently frozen by the provincial government, is made up of industrial taxes from oil and gas companies within the Improvement District.

Cold Lake, Bonnyville, M.D. of Bonnyville, Glendon, Fishing Lake and Elizabeth Metis Settlements all received money from ID 349 in 2018, while last year’s money has not been released.

Sawchuk said the M.D. will push back.

“There’s a lot of people who are looking for ID 349 money, it would be hit the same amount. Province wide, this is going to be a great concern to municipalities, because if the rurals take a hit like this they can’t help to support their urban partners.”

‘Significant impact on a lot of municipalities’

MLA David Hanson said the new assessment could significantly impact the M.D.

“I don’t have a lot of information on it. It is under review right now. But if there’s a downgrade in the assessment that could have a significant impact on a lot of municipalities, especially ones like Wood Buffalo and M.D. of Bonnyville for sure,” he said on Friday on The Alberta Legislature.

“We’re getting pressure from oil and gas companies that are struggling right now because of the downturn and because of lack of access to coastal waters and they’re looking for any way to survive. I don’t know how it’s going to come out. But we’ll see.”

M.D. of Bonnyville CAO Luc Mercier, a former assessor, was chosen by RMA (Rural Municipalities of Alberta) will be involved in stakeholder conversations that will be part of the provincial government’s decision, which Madu wrote will be in the spring.

Other seats at the table will be filled by:

• Alberta Urban Municipalities Association (AUMA)
• Canadian Association of Petroleum Producers (CAPP)
• Explorers and Producers Association of Canada (EPAC)
• Canadian Energy Pipeline Association (CEPA)
• Canadian Property Tax Association (CPTA)
• Alberta Municipal Affairs
• Alberta Energy & Associate Ministry of Natural Gas

These changes will be applied in the 2021 municipal tax year.

In addition, a reduction in assessment for shallow gas assets will be applied for 2020 in line with what started in 2019 under the Shallow Gas Tax Relief Initiative (SGTRI).

These 70,000 wells and associated pipelines will receive a 35 per cent property assessment reduction for the 2020 tax year.