UPDATE: Rurals facing big tax increases, layoffs if energy assessment review goes ahead

Update at 12:45 PM: Media Release from Lac La Biche County

Lac La Biche County is asking the public to contact MLA Laila Goodridge and ask her to go against the potential oil and gas assessment changes.

If the oil and gas assessment changes are made, Lac La Biche could lose up to $5.89 million in revenue for 2021. The amount lost will only increase as the years go on.

To make up for the nearly $6 million lost, the County will have to raise taxes and/or cut services, this coming at a time when money is tight for most residents.

“The Province has chosen the worst possible time to shift the tax burden to those who can least afford it,” says Mayor Omer Moghrabi. 

“Everyday residents, farmers, and small businesses are being asked to pay more. I do understand that the oil and gas sector has been struggling, but cutting municipal and school taxes by deciding that oil and gas properties are now worth less is not the way to stimulate the economy or put Albertans back to work. The services that municipalities provide are some of the most necessary and efficient in the public sector.” 

To contact MLA Laila Goodridge, and advocate against the oil and gas assessment changes, call 780-634-3884, or email at FortMcMurray.LacLaBiche@assembly.ab.ca.

—

M.D. of Bonnyville, County of St. Paul, and Lac La Biche County were three of the handful of municipalities rallying at the Legislature about potentially lost revenue. A Municipal Affairs spokesperson says their voices will be heard.

Rural municipalities in the Lakeland are worried that a significant chunk of their annual revenue could be lost if the provincial government goes ahead with an overhaul of how oil wells and pipelines are assessed.

For the past several months, an assessment committee comprised of energy leaders, the Ministry of Municipal Affairs, and municipal advocacy groups are updating how some oil and gas properties will be valued provincewide to address financial concerns from the energy industry.

However, the M.D. of Bonnyville, Lac La Biche County, and Vermilion River County are saying taxes will be ratcheted up or employees will be laid off with decreased services to offset lost money if the new formula goes through.

There are four scenarios local councils reviewed based on data broken by RMA (Rural Municipalities of Alberta), which advocates on behalf of rurals, on the impacts the assessment could have.

Potential loss of almost $14 million for M.D.

The M.D. would be one of the most affected in the province, said Reeve Greg Sawchuk.

With roughly 11,000 oil wells in the M.D. of Bonnyville, the loss in annual revenue could be as high as 16 per cent, or $13.7 million, if industry’s favoured scenario goes ahead, he said.

“The residential mill rate increase that would be required by the M.D. of Bonnyville to make up the shortfall is 262.7 per cent,” said Sawchuk on The Morning After.

“Where are we going to cut costs? And the first place we would probably cut costs is in our capital spend, so what we do as far as construction goes. We put out a number of contracts, road building and whatever. If that comes to an end, now we’ve got construction companies who no longer have jobs up there for local people.

“That’s why we are so upset about this. We are going to be talking to the MLA again and we’re trying to get in front of the Minister as well.”

This review will impact urbans in the Lakeland as well.

Tax revenues from the Cold Lake Air Weapons Range (ID 349) for Cold Lake, Bonnyville, the M.D. and Glendon, will be affected, which last year represented $28 million for the area.

Mayor of Lac La Biche County Omer Moghrabi is worried municipalities are being left in the dark about the potential impacts.

“To me there was no meaningful consultation with the actual municipalities, so I believe the oil and gas industry were there and did have the opportunity to present their case. That’s one of the things emerging, the government needs to have some meaningful dialogue before any decision is made,” said Moghrabi.

“The other thing is–is the assessment being done fairly across the board with all oil and gas? Because we are hearing that there are bigger breaks for the bigger companies, and the smaller ones are going to get larger assessments.”

Local leaders cited numbers that 96 per cent of oil companies will not benefit from this change.

Province says they’re looking for balanced approach

Ministry of Municipal Affairs press secretary, Tim Gerwing, said the AUMA and RMA were involved in the discussions and their voices will be heard.

He said there needs to be a balanced solution for municipalities and energy companies and no final decision has been made.

In 2019, the government reduced assessment on shallow gas properties in anticipation of the outcome of this review. The government made up that reduction to municipalities, but in 2020 did not.

“We know that any potential solution needs to find a balance between the wellbeing of our municipalities and the viability of the companies that invest and create jobs in those municipalities,” Gerwing said in a written reply.

“Alberta’s assessment model for linear taxation has not been updated since 2005. That said, the government is consulting with municipalities and industry to determine the best path forward.”  

Dale Swyripa, Vermilion River County Reeve, said the impact could be an increase up to 109 per cent of residential mill rates or services could be cut up to 45 per cent.

“The drop in assessment doesn’t mean that oil companies are going to save, or that the money will stay in Alberta,” said Swyripa who previously worked in the gas industry.

“The oil industry needs additional help to get their oil out of the area. Having a place to move it benefits them the most.”

The government just finished a long summer session and a final decision will be made in the fall.

With files from Bianca Mazziotti and Angela Mouly.