Kneehill County council heard some stark possibilities at their Aug. 18 regular meeting, possibilities linked to a provincial government proposal councillors say will shift tax burden away from multinational corporations and onto Alberta taxpayers.
Councillors heard a report about the United Conservative Party (UCP) government’s oil and gas assessment review currently ongoing.
County Chief Administrative Officer (CAO) Mike Haugen gave a blunt summary of the assessment review and its possible effects on ratepayers.
“During (the assessment) review, municipalities were not consulted and the resulting information has not been shared by the province and remains under a communications embargo,” stated Haugen in his report to council.
“Since that time, the province has worked primarily with industry to generate four possible scenarios for changes to the oil and gas assessment models.
“This process was largely industry driven and municipal organizations such as Rural Municipalities association and Alberta Urban Municipalities Association were included, though both report their concerns were ignored and their input muted.
Both entities oppose all four scenarios.
“There is widespread concern about this issue as the province conducted the work in secrecy, and has not made pertinent information, such as the technical review and long-term impact modelling, available.
“Of the scenarios proposed, Kneehill County stands to lose between $3.5 and $7.3 million per year. To put that in perspective, all residential and farm taxes in the county amount to approximately $2.8 million per year.”
Haugen stated analysis of the four options suggests multi-national corporations have the most to gain, while small to medium-sized companies and Alberta citizens in general will be told to pick up the slack.
“Based on the Government of Alberta’s proposed scenarios, the largest oil and gas companies operating in the province will receive a disproportionate share of benefits from changes to the assessment model,” stated the CAO.
“Small and locally-owned companies will, on average, receive significantly less benefit, and in many cases will face significant assessment increases.
“Even under industry’s most favourable scenario (option D), 145 companies would face assessment increases.
“The only groups that win in every scenario are the largest oil and gas companies operating in Alberta, many of which have holdings worldwide and would be under no obligation to re-invest savings in the province.
“There has been absolutely no link established between the assessment model proposals and making Alberta’s oil and gas industry more competitive.
“If Kneehill County were to lose $7.3 million in revenue (option D), the County could increase residential and farmland taxes by 40 per cent and business taxes by 44 per cent and would still face a loss of over $1 million dollars.
“If the County wanted to recoup the losses completely, taxes would have to increase almost 50 per cent for all residents, farms, and businesses within the County. If the County were to recoup this just from residents and farms to help business, tax increases for 2021 would be approaching 300 per cent.”
During discussion, Haugen stated the trickle down effect will hit virtually every municipality in Alberta, urban or rural, as funding for things like recreation facilities and fire departments are cut.
He said some municipalities feel this would make them unsustainable, shutting down and being run by the province.
“The urban municipalities understand this isn’t just a rural issue,” said Haugen.
Haugen stated it also seems that industry is pushing for some kind of government control on tax rates to prevent municipalities from simply increasing their non-residential mill rate.
It was also stated the energy industry reaped a considerable reward last year when the provincial government cut their taxes with changes to shallow gas wells.
The CAO noted Kneehill County has already been in contact with MLA Nathan Cooper to voice concerns about the assessment review, and Haugen added ratepayers are also encouraged to contact the MLA to do the same.
Reeve Jerry Whittstock stated all four of the assessment options appear to require Kneehill County ratepayers to subsidize oil and gas corporations.
“It’s not very good news,” said Whittstock. “We can’t let this happen.”
Coun. Wade Christie stated he was concerned there is no information about how this assessment will affect taxpayers in the future.
Coun. Glen Keiver asked when the decision on this assessment review will be made.
Haugen stated he was not able to find any information about a specific time a decision will be made.
Coun. Faye McGhee stated she heard Premier Jason Kenney answering a reporter’s question by saying the UCP government is seeking input from municipalities and she said she felt the word “seeking” was “very misleading.”
Coun. Ken King stated he was frustrated that the provincial government is listening to corporations, “…but to no one else. The province is in their pocket. I don’t believe the premier is interested in our opinions.”
Haugen’s entire multi-page report is available on the Kneehill County website at https://kneehillcounty.com/AgendaCenter/ViewFile/Item/586?fileID=17076.
Councillors accepted the report for information.
Stu Salkeld, Local Journalism Initiative reporter