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Property taxes could increase by up to 25 per cent if new provincial asessment model is chosen

Fort Assiniboine councillor encourages residents to write premier, municipal affairs minister and local MLAs to stop potential damaging change to linear assessment taxation model
Burrows-cropped assessment
Woodlands County mayor John Burrows pictured here at the last in-person council meeting in the spring said the UCP government proposed linear assessment taxation models will cause severe hardship for rural municipalities and their residents.

WOODLANDS COUNTY-Woodlands County council wants to know where each of its provincial representatives stands on the province's recent announcement that Alberta will be changing the way it assesses linear municipal property taxes.

Councillors, during their Aug. 4 videoconference meeting, unanimously approved a motion by Whitecourt Central Coun. Ron Govenlock to invite United Conservative Party (UCP) MLAs Martin Long and Glenn van Dijken to a partial closed-door meeting with Woodlands County councillors. Long represents Yellowhead West while van Dijken serves Athabasca-Barrhead-Westlock.

In a separate motion by Whitecourt East Coun. Jim Rennie, council unanimously authorized administration to embark on a wide-spread information campaign to both inform residents, businesses and organizations about the ramifications that the proposed models will have on them. He also hoped the move would motivate residents to join the campaign to pressure the government to reconsider.

Recently, the government announced that they are going to be switching the way oil and gas companies will be assessed for the infrastructure they have within municipal borders which impacts the amount of property tax the industry pays.

No matter which of the four proposed assessment models the government chooses the impacted municipalities, mostly rural, will see their revenue reduced dramatically.

The Rural Municipalities of Alberta (RMA) estimates that municipalities could lose anywhere between $127 and $382 million in tax revenue in 2021. To overcome this shortfall, the RMA, along with multiple municipalities have come out on record saying that they will have no choice but to cut services, lay-off staff, increase their mill rates or a combination of all three.

"I want to know if they are in support of the government or the residents," he said. Part of the meeting will include a public engagement session with residents, likely due to COVID-19 safeguards via teleconference.

Mayor John Burrows agreed with Govenlock but was more sympathetic to MLAs, saying that from his understanding most MLAs learned about the government's plans at about the same time municipalities were informed.

Municipalities were informed of the plan about two weeks ago by the RMA after a government embargo ended. It should be recognized that although the RMA was involved in the process of creating the proposed models along with government and industry stakeholders they are actively campaigning against them. They have also stated that the about a dozen options they presented were given little consideration.

According to the RMA predicts Woodlands County would lose seven to 14 per cent of its total assessment base equating to $167,695,809 to $326,453,449 or from $1,421,860 to $3,068,557 loss in tax revenue.

However, chief administrative officer Gordon Frank said the RMA's estimate is based on the 2019 tax rate and 2018 assessment.

"As council is aware the 2019 assessment has declined even further," he said, adding the result is the new models will have an even larger impact.

Frank said in 2021 under Scenario A where the county's municipal non-residential linear assessment is reduced by 14 per cent and given a modest three per cent residential mill rate increase they would have to increase its non-residential (commercial and industrial) mill rate by 10. 9 per cent to get back to 2020 revenue levels.

"The worst-case scenario a 21.27 per cent increase [non-residential]," he said.

He added under the Municipal Government Act (MGA) the largest spread between residential and other tax categories is five to one saying under Scenario A had some leeway and could increase its residential mill rate by more than three per cent and still meet requirements.

Frank then said under Scenario D, which was proposed by the energy industry that sees a 24 per cent decrease in assessment, an almost 25 per cent residential tax rate, in the worst-case scenario.

"[The proposed models] are a tremendous hit to the organization," he said. "And although the government is focusing on linear and machinery and equipment non-residential property also includes commercial property. So businesses in the county would take a close to 25 per cent hit if Scenario D is implemented by the government."

How to stop the government's plan

As part of the RMA information package on the various models, they also included several templates that municipalities could tailor to various government officials.

Rennie noted that although administration's recommendation to write to their MLAs and embark on a public information campaign, he said it did enough.

"If our residents knew there was the potential that their municipal taxes could go up 25 per cent, they would be screaming. The province plans to do this to get the big oil guys back in business ... I can appreciate that, but it shouldn't be on the backs of our residents," he said."

Rennie suggested a virtual town hall, moderated by the mayor, while at the same time coordinating their efforts with neighbouring municipalities (Mayerthorpe, Fox Creek, Whitecourt, Swan Hills, County of Barrhead), especially those in which they they have cost-sharing agreements with.

"Those communities have to realize we are going to have the most radical shakeup of our taxation model in the history of our municipality," he said. "[In an effort] to aid some already wealthy companies and they need to step up because we are never going to be in a position to do any cost-sharing with another municipality if this goes through.

Burrows agreed, saying the proposed models don't take into account the taxes still owed by oil companies to the municipalities or province downloading of other costs to the province.

Starting this year, counties and municipal districts and communities under 5,000 will have to start paying a portion of their policing costs.

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.

"We only have an operational budget of about $21 million and if you take $3 million of uncollectable tax [from oil and gas companies in 2020] that the government has given us no mechanism to collect ... and when the police model gets going to its fullest, that's another $500,000."

Later in the meeting, Burrows said the province is doing this to help the ailing energy companies but noted there is no guarantee that they will use it wisely.

“The provincial government’s argument that they are reducing taxation to make companies more viable, is flawed. Two companies in our municipality failed to pay 100% of their municipal taxes to Woodlands County, and they are still going broke,” he said via an Aug. 7 media release. “Furthermore, the Alberta Energy Regulator is continuing to approve companies that have not paid taxes, the ability to acquire more assets. Woodlands County Council has no confidence that a company that cannot make money with its current assets, and therefore cannot afford to pay its taxes, can afford to purchase more assets with the blessing of the Government of Alberta. There is a point when companies have reached their end.”

Burrows noted if this change goes through, it will mean they effectively will have lost $10 million out of the 2021 budget, by the time uncollectable taxes and other provincial downloading has occurred.

"If anyone thinks they can maintain a municipality on an $11 million budget for 800 kilometres of roads, much of them aging, the services are going to be pretty shabby."

Govenlock said one of the things he was most concerned about is the lack of representation from MLAs Long and van Dijken.

"They have a responsibility to the decisions that are in the best interests of the residents of this area and their failure to do that is extremely disappointing," he said. "That is why it is imperative that we get these gentlemen in front of council and the public to explain themselves."

Fort Assiniboine/Timeu Coun. Dale Kluin said while that was true any letter-writing campaign needs to start with Premier Jason Kenney and include the Minister of Municipal Affairs as well as Long and van Dijken.

"It just baffles me that we are going to change legislation so that shareholders and companies can continue to make millions and do it on the back of Albertans. Surely this government can see this is not the way to get back to what we need to do."

Barry Kerton, TownandCountryToday.com


Barry Kerton

About the Author: Barry Kerton

Barry Kerton is the managing editor of the Barrhead Leader, joining the paper in 2014. He covers news, municipal politics and sports.
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