SUNDRE — Potential changes to oil and gas property assessments proposed by the provincial government would not impact the town’s bottom line as hard as counties and municipal districts.
The government has not yet announced an official policy, but a review considering options to alleviate financial pressure on the province’s oil and gas operators has prompted the Rural Municipalities of Alberta (RMA) to express concerns.
“A reduction in assessment will force municipalities to make a range of revenue-generation and spending changes, including some combination of raising tax rates on residential and non-residential property classes, reducing service levels, revising or cancelling intermunicipal agreements, or potentially facing non-viability,” reads a portion of the organization’s position statement on the issue.
“The actual impacts of the proposed changes will vary widely by municipality.”
The RMA report states that under the four scenarios being considered by the government, Alberta municipalities stand to lose between $109 million and $291 million in tax revenue in 2021. The scenario favoured by the oil and gas industry would for the average rural municipality represent a loss of more than 12 per cent of its revenues in 2021.
And although the government’s objective is to support the energy sector, the RMA says the changes being considered do not include a “mechanism to require the oil and gas industry reinvest any cost savings received through changes to the assessment model in Alberta in the form of job creation and/or capital investment.”
Counties and municipal districts with an assortment of oil and gas properties ranging from pump stations to pipelines stand to get hit the hardest, but the Town of Sundre would not be completely immune, said Chris Albert, director of corporate services.
Pipeline right of ways that go through town do generate some taxation revenue, said Albert during a phone interview.
“It’s referred to as linear in our categorizing,” he said, adding they represent roughly $8.3 million of the municipality’s total assessments, which amounts to about $382 million.
“It’s about 2.2 per cent of our total assessment value. So, it’s not a large competent, and that translates to just over $100,000 worth of tax revenue per year, which is about 2.9 per cent of total budget,” he said.
The changes under consideration “would impact us a little bit, but not as significant as it would to a county. It shouldn’t result in large tax increases if the province decided to change something.”
Asked how readily Sundre would be able to absorb further loss of revenue — changes to the provincial police funding formula will have the municipality paying well over $100,000 annually in the coming years — before having to look at cutting services or increasing taxes, Albert said, “Any loss of revenue is not a good thing. Somebody else has to make it up.”
But council’s mandate and administration’s goal has always been to try to maintain as proportionate a tax rate as possible, he said.
“We’d probably do whatever we could to mitigate the increase that would flow through to the average ratepayer.”
The proposed changes are the result of an ongoing, government-led review to provide relief to the province’s oil and gas operators. The process has involved consultations led by a committee of industry and government representatives. The government has yet to commit to a specific approach, and continues to engage with municipalities.