The Village of Alix voiced concern about proposed provincial government changes to the way oil and gas property is assessed and taxed in Alberta.
The issue was discussed at the Aug. 5 regular meeting of council.
Village Chief Administrative Officer Michelle White included for council’s perusal a letter from the Alberta Urban Municipalities Association regarding the “Assessment Model Review,” which is more commonly referred to among rural municipalities as the oil and gas assessment review.
The AUMA letter stated the provincial government through two departments, Municipal Affairs and the Associate Ministry of Energy and Natural Gas, has been, since January 2020 conducting a review of how oil and gas properties are assessed and therefore taxed in Alberta with the assistance of four oil and gas industry associations and representatives of the AUMA and Rural Municipalities Associations.
The letter also stated this process had been embargoed, or muzzled, so that no one involved in the process was able to speak about it until recently.
Four options had been developed regarding changing how certain oil and gas property is assessed for taxation.
“Each of these scenarios proposes to significantly reduce the assessment value of these properties through changes in depreciation rates,” stated the AUMA letter.
“If implemented, each scenario will have far-reaching impacts on municipal tax revenue, primarily for rural municipalities where wells and pipelines represent a large portion of the local assessment.
“Urban municipalities would be less directly impacted, but the reduction in rural property assessment would result in urban municipalities becoming responsible for a greater share of provincial education property taxes.”
Mayor Rob Fehr stated he felt the council should discuss this issue as he recently met with other reeves and mayors about the effects these changes could have on both rural and urban areas.
He stated it appears the provincial government is looking to download the cost of oil and gas corporation taxes onto rural municipalities.
White noted that certain options in the process include different types of oil and gas property, including machinery/equipment or facilities.
She noted that if oil and gas facilities are included in the changes, the Village of Alix will be affected because the village has an oil and gas facility inside the municipal boundary.
Mayor Fehr stated he was concerned about the way the process was handled.
“This is a game changer,” said Fehr. “This is going to affect a lot of municipalities. My concern is the lack of dialogue and consultation. It felt very heavy-handed.”
White reiterated what the AUMA letter noted about school requisition, which is the provincial property tax that funds the education system.
Municipalities collect it on behalf of the province.
If the education system requires a certain amount of funding from property tax, but some properties, such as oil and gas, are given a major tax cut, the amount of money going to the provincial government for education will also be reduced and would have to be made up somewhere else.
Councillors accepted the AUMA letter for information.
Local Journalism Initiative reporter