Outrage over oil and gas assessment review

A lonely pump jack in Special Areas near the County of Stettler Boundary. ECA Review/Terri Huxley
Written by Terri Huxley

A lonely pump jack in Special Areas near the County of Stettler Boundary. ECA Review/Terri Huxley

Last week, it was reported by The Review that the County of Stettler took the charge by protesting at the steps of the Alberta legislature.

More counties including Kneehill, Starland, Paintearth and Flagstaff to name a few are feeling similar about having an assessment review model reworked with much steeper tax breaks for the energy sector which in turn is absorbed by these rural municipalities.

Starland County Reeve Steve Wannstrom sent a strong letter to Premier Jason Kenny and Municipal Affairs Minister Kaycee Madu about their specific concerns.

“The proposal will put many municipalities’ viability in jeopardy and will leave rural residents with no one to look after the infrastructure that the municipalities have invested in over the years,” stated Wannstrom.

The Rural Municipalities of Alberta (RMA) is made up of the majority of Albertan counties as a lobbying group among other responsibilities.

At the protest on July 30, 34 of the 68 member municipalities were in attendance in Edmonton but action is still being taken from counties themselves now.

On Tues. Aug. 4, representatives from Kneehill County and Wheatland County met with Nathan Cooper, Olds-Didsbury-Three Hills MLA, to lobby against the proposed changes to Oil and Gas Assessment announced.

These assessment changes would reduce property taxes for some oil and gas companies, shifting the tax burden from industry to county residents, commercial properties, and local businesses.

The four assessment scenarios proposed by the province would result in significant tax revenue loss for Kneehill County, ranging from $3.5 million as best-case scenario to $7 million as the worst case.

For the County of Paintearth, impacts indicate a loss of tax revenue between eight and 13 per cent, depending on the proposed option.

“In the worst-case scenario, this means lost tax revenue of $2.1 million in the first year alone,” said Reeve Stan Schulmeister.

“The situation is dire,” he continued. “In order to accommodate the proposed changes, service levels our ratepayers have become accustomed to will have to decrease, along with the footprint of County operations.”

Flagstaff is seeing similar if not higher numbers with as much as 18 per cent drop to revenue (roughly $5 million) and nearly a 70 per cent reduction to staff employees.

To recoup this substantial loss, drastic cuts to services, extreme tax increases (some as high as 200 per cent), and service fee escalations would be required.

Support traditionally given to local municipalities, recreation facilities, and community groups would also be in jeopardy.

This substantial impact is compounded by the already strenuous nature and now instilled preventative measures of COVID-19 and the provincial download of policing costs have counties feeling the pressure to reduce services in order to hold the line on taxes.

According to the RMA, following a review process involving municipal and industry stakeholders (including RMA), the Government of Alberta is currently considering several options relating to possible changes to the assessment of wells, pipelines, and machinery and equipment properties.

The province states the changes are ‘intended to support the competitiveness of the oil and gas industry while ensuring the ongoing viability of municipalities’.

Throughout the review process, RMA has expressed concern that the review was not focused on maintaining the objectivity of the property assessment system while modernizing measures and values to reflect new technology.

Instead, the Government of Alberta based the review on the assumption that the assessment system could be manipulated to reduce costs for the oil and gas industry through reduced assessment and taxation.

Although RMA provided significant data and analysis indicating that many of the changes proposed to the assessment system through the review would have significant fiscal and viability impacts on the municipalities (and provide limited competitiveness benefits to industry), the options currently being considered by provincial decision-makers reflect a lack of focus on the important role of property taxes in municipal operations, including to provide the infrastructure and services that the oil and gas industry relies on.

The RMA also gave approximately 12 different ideal approaches to the Ministers of Municipal Affairs, Energy, Junior Minister for Natural Gas and Energy, and the Canadian Association of Petroleum Producers (CAPP) [who represent four per cent of Oil and Gas companies and represent 8 per cent of production].

Reeve Wannstrom said all were ignored with the only proposal that came forward was from CAPP, who are pushing for the most extreme scenario, and would push almost all rural municipalities into extreme viability issues.

“Forcing the rural municipalities to increase taxation by 200 per cent or more will drive business and residents away, and will make it impossible for us to attract any new investment in the municipality. This will continue to push businesses of Rural Alberta to the #2 corridor. Even the current wind and solar projects in our municipality could end up terminating their projects because of the changes in taxation,” concluded Wannstrom.

No decisions have been made to the model as of yet but may change by late August with the implementation beginning 2021.


Terri Huxley

ECA Review

About the author

Terri Huxley

Terri grew up on a grain farm near Drumheller, Alberta with an eye for the beautiful and uncharted. Living in such a unique and diverse area has helped her become the photographer and reporter she is today.

Coming from the East Central region getting this newspaper on her dinner table growing up, it helped her understand the community she now serves.

In May 2019, Terri was awarded Alberta Weekly Newspaper Association (AWNA) Canada's Energy Citizens Photographic Awards Sports Action – First Place as well as first for the same sports action image nationally with the Canadian Community Newspaper Association (CCNA). Fast forward to 2020, she has won second in the same category for the AWNA.