Councillors, during their Aug. 11 meeting, instructed the administration to write letters urging the province to reconsider changing the amount energy companies have to pay municipalities.
The County of Barrhead and Woodlands County both asked the municipality to write letters lobbying Athabasca-Barrhead-Westlock United Conservative Party (UCP) MLA Glenn van Dijken, as well as Premier Jason Kenney and Municipal Affairs Minister Kaycee Madu to reconsider the change.
Coun. Rod Klumph suggested it would be in the best interests of the municipality to support both municipalities.
"If they do this to the rural municipalities it will only be a matter of time before they do something similar to us," he said.
Linear assessment is the way municipalities collect revenue from companies that have items like oil and gas wells and pipelines, and power generation, power lines and utility lines within their municipality.
Depending on the model the province selects, municipalities would see a reduction from 14 to 24 per cent in the non-residential linear assessments. Because pipelines, oil wells, powerlines, et cetera are mostly located in counties and municipal district jurisdictions, it is rural municipalities that will be impacted the most.
The Rural Municipalities of Alberta (RMA) estimates that its members could lose anywhere between $127 and $382 million in tax revenue in 2021.
The RMA estimates that 62 to 88 per cent of rural municipalities will lose more than 10 per cent of their assessment base. To compensate for the loss of the assessment base and the associated lost revenue the RMA believes many rural municipalities will have to increase their residential mill rates dramatically from 85.8 to 199.4 per cent, while the non-residential mill rate could go up anywhere from 15.6 to 31.9 per cent depending on the solution local governments choose.
The RMA also estimates that province-wide municipalities, would shed 960 to 2,400 jobs.
The government's rationale for the potential change, which is expected to be finalized within the month, is to bolster an ailing energy industry. The model was last revised in 2005.
County of Barrhead impact
At a special July 30 meeting, County of Barrhead manager Debbie Oyarzun estimated the municipality would lose between $500,000 to $900,000 in revenue. However, in an Aug. 10, letter reeve Doug Drozd estimates the cumulative effect of the assessment model change and the additional expenses from the change of the police funding model range from $520,000 to $890,000. In 2020, municipalities will have to contribute 10 per cent. Their share will rise every year until it reaches 30 per cent of policing costs by 2023. For the County of Barrhead in 2020, this means an extra $133,492 increasing to just over $400,000 in 2024.
To compensate for the loss of revenue, in a letter signed by reeve Doug Drozd, the county states they would have to increase the residential mill rate by between 11 and 20 per cent or the non-residential mill rate by 17 to 33 per cent.
In addition to mill rate increases, to remain viable, Drozd said the municipality may be forced to reduce full-time staffing from 14 to 25 per cent, reducing service levels and infrastructure spending and potentially revising or cancelling agreements they have with other municipalities, such as the ones they have with the Town of Barrhead.
Impact on Woodlands County
Woodlands County mayor John Burrows stated in an Aug. 6 letter that the impact of the proposed change to linear assessment model on his municipality would be just as devastating.
Based on RMA data, Woodlands County could lose up to 14 per cent of its tax revenue, equating to a $3.1 million decrease in 2021 alone. Woodlands County and the County of Barrhead both project that rural municipalities will lose even more linear assessment revenue in subsequent years.
Burrows said to make up for the loss in revenue, the municipality will have to either increase its residential and non-residential mill rates and/or decrease service levels and infrastructure spending or some combination of all three.
He also said the loss in revenue would impact how much the municipality could contribute to joint municipal projects.
Will the change help energy companies?
At previous County of Barrhead and Woodlands County council meetings on July 30 and Aug. 4, respectively, both councils questioned whether the proposed changes would have the desired impact.
The report prepared by the RMA believes smaller to mid-size oil and gas companies, which make up the bulk of the industry, have little to gain from the proposed assessment model. Both municipalities questioned how the province came up with the models, noting municipalities were not consulted.
The province started the review in 2017 with select government agencies and industry representatives with other stakeholders, such as the RMA and the Alberta Urban Municipalities Associaton (AUMA) being added to the process this year. However, due to an embargo, the RMA only recently was able to inform its members of the potential changes.
"These discussions took place in secrecy, behind closed doors, [with the province] only disclosing some of the information publicly on July 30," Burrows stated in an Aug. 6 letter.
It is also a sentiment County of Barrhead noted on July 30.
Public advocacy
In addition to asking neighbouring councils to write letters to the province, both councils previously have asked their residents to also hold the government accountable, asking them to write and call the premier and Municipal Affairs Minister Kaycee Madu, as well as their local MLAs. They also urged residents to take action quickly as the province is expected to decide which assessment model they will use by the end of the month.
