Rural counties and M.D.’s have a better indication of how the new assessment model review will impact their tax revenues.
The County of St. Paul expects a $1.5 million hit, the M.D. of Bonnyville anticipates roughly a $1 million loss, and Lac La Biche County a $300,000 drop because of these changes, which take effect in 2022.
Announced a couple of weeks ago by the Minister of Municipal Affairs, energy companies will get a three-year property tax holiday when drilling new wells and building new pipelines, plus the government will also eliminate the Well Drilling Equipment Tax provincewide for new drills, all in hopes to create new jobs and drilling.
The government also lowered assessments for less productive oil and gas wells while continuing the recently introduced 35 per cent assessment reduction on shallow gas wells for three years, in the first review on these properties since 2005.
Each municipality was pleased to see the original assessment model review paused back in September, where they feared millions less in tax revenues from oil companies.
Sheila Kitz, County of St. Paul CAO, said they have significant decisions to make with anticipated closures of well sites, facilities, and pipelines.
“Our revenues from Designated Industrial Properties are being affected by almost 10 per cent,” she said in a written statement.
“It is our understanding that the compromise is resulting in assessment values being allowed to be depreciated more than the values that have been established.
“The oilfield in the County of St. Paul is mature and therefore likely many of the wells and pipelines have been fully depreciated, so the increase in the amount this infrastructure can be depreciated hits the County especially hard.”
The provincial government said their decision looked to strike a balance on viability for both municipalities and industry but was not a long-term plan for assessment, which will come later.
M.D. Reeve Greg Sawchuk said on The Morning After last Thursday said this plan has a chance to create jobs.
“We’ve said is if the province wanted to create was jobs, and get people back to work, stimulate the industry–I think this does it. And like I’ve said, the ball is now in industry’s court,” he said.
“We know that well drilling, pipelines have really dried up in the last few years. And so here’s an opportunity for them to put some people locally back to work, and we hope they jump on it.”
For Lac La Biche County, mayor Omer Moghrabi said on The Day After Debrief was less optimistic.
“When you look at it, there is still going to be substantial losses. And it’s a pause. We know there’s a review that has to be done. There’s still the plants, SAGD, those things are major in terms of how they’re going to assess them,” said Moghrabi.
“There’s not going to be a lot of exploration, and it hasn’t been for the last three years, four years. It might spur some more, which we would hope…we hope there is more because that would mean it also means people to work.
“But you got to remember we really don’t have a place to send our product. This COVID has really reduced the amount of oil and gas that’s required.”
Administrations are currently working to see how these losses impact future budgets.