ATHABASCA — Athabasca County would like to either be made whole by the Alberta Government, or regain its ability to levy taxes on well equipment again.
Under the Municipal Government Act there is a revenue source for rural municipalities with oil and gas wells within their borders called the Well Drilling Equipment Tax Regulation, allowing municipalities like Athabasca County to apply a tax levy to companies operating in their borders and generate income from the resources extracted.
“In 2020, (the government) turned the Well Drilling Equipment Tax Regulation rate to zero and that was done to encourage drilling equipment to remain in the province,” said reeve Brian Hall in an Aug. 19 interview. “So, while I don't dispute the jurisdictional right of the government to use this discount as a tool to help the economy, I believe, and council supports, that they should be doing it with their own wallet.”
The example Hall used was buying Town of Athabasca mayor Rob Balay lunch using Village of Boyle mayor Colin Derko’s wallet to pay for it.
“The other solution which actually doesn’t interfere with their economic plan would be for them to fund the municipalities for what they’re losing,” said Hall.
He noted oil companies are producing record volumes, but municipalities are watching that potential revenue fly out the window.
“This discount was put into place when the WTI (West Texas Intermediate) was around $50, WCS (Western Canadian Select) was around $30 and now WTI and WCS are in the $100 range,” he said.
In 2018 within Athabasca County there was one well, four in 2019, 11 in 2020 and 54 in 2021 and at the end of the second quarter of 2022, there are 16.
“So, the financial impact, the numbers are in 2018, $3,500; 2019, $30,000; 2020, $85,000; 2021, zero but the opportunity cost, the revenue we could have had but didn’t was around $430,000,” said Hall. “For 2022, my quick, rough math is about $122,000 that is already revenue that simply does not come to the county.”
That is over $550,000 in lost revenue, so council decided to bring a resolution forward at the Rural Municipalities Association (RMA) convention in November. But first, it needs support from others.
“The process is, we put a resolution together on something that's a concern to our municipality and you believe other municipalities and take it to the zone meeting, in our case the Pembina Zone which has already been done and it passed unanimously there,” he said.
Now the resolution will be presented at the convention, being held Nov. 7-10, in Edmonton and if adopted it will become the official position of RMA, which will then begin to advocate and lobby the government on behalf of its members.
“When I spoke with (then) minister of Finance Travis Toews he said the recovery plan was in place for two years and then the government would make another decision,” said Hall. “But whether they choose to carry on or do something different, I think my point is always (while) it’s their right to do that, they should be doing it on their own dime.”
This is just something else for municipalities to pick up after cuts to grants and other funding and downloading like policing costs.
“Council has taken a position on this obviously (and) I'll continue to ask about it when we get a chance to talk to other ministers and it's something I’ll send minister (of Municipal Affairs Ric) McIver a letter to ask him as well, to put it directly to him on behalf of the municipality,” said Hall.
