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Counties and municipal districts could be hooped by tax change

Posted on August 20, 2020 by Vauxhall Advance

By Collin Gallant
Alta Newspaper Group – Medicine Hat

Alberta’s counties say tax bills for non-oilpatch properties may have to triple or even quadruple to make up for changes proposed by the provincial government.

Oil and gas producers have lobbied for relief from what they see as high property taxes for years, and with natural gas prices in a worsening decade-long slump in 2018, the province announced a relief package while assessment formulas were examined.

Last week, the Rural Municipalities Association said each of four options for the overhaul will have “potentially devastating impacts on rural Alberta.”

“The proposed changes prioritize reducing industry cost with little focus on municipal impacts,” RMA president Al Kemmere stated in a release. “What the review does show is that the province and industry do not understand the important role municipalities play in Alberta’s economy.”

The RMA says its analysis shows that under the most-major proposal, its 67 members could see a cumulative decrease in tax revenue of $480 million per year starting in 2021.

The Municipal District of Taber met last week to receive an impact report that states it stands to lose between 13 and 17 per cent of its tax revenue, equal to $3.1 million to $4.1 million, requiring substantial tax rate changes.

“The above (tax) increases are not realistic,” states a briefing note.

Cypress County stated last week its specific revenue hit could be in the range of 16 to 22 per cent.

“In the worst case scenario, this means lost tax revenue of $7.8 million in the first year alone,” stated County Reeve Dan Hamilton. “The potential impact on Cypress County, frankly, is insurmountable.”

Officials with the Ministry of Municipal Affairs told the Alta Newspaper Group that it is still consulting on the issue.

“A careful balance has to be found to ensure both sides are strong and viable,” wrote spokesperson Tim Gerwing, of the minister’s office, who said the process will continue into the fall. “No decisions have been made at this time.”

A special meeting of Cypress County council discussed the issue on July 28 ahead of concerted action from a number of counties hardest hit, calling for reconsideration and for residents to call MLAs on the issue.

In Cypress County’s case, states the release, losing tax assessment – which is charged against mill rates to determine tax bills – would mean other classes, like farm, residential and other commercial property would see increases to balance the budget.

Hamilton said tat even if the county was to cut its operating budget by 70 per cent, tax increases would still be needed.

The County of Newell, surrounding Brooks, says the options represent between a $7.2 million and $11.6 million drop in annual revenue – greater than its entire staffing budget.

To balance the budget would require tax increases for other property classes of between 327 and 466 per cent.

A resolution by that council also states that changes would shrink the linear tax base by one third to half, and lead to a tax increase of between $2,650 to $4,250 per year on a $300,000 home.

Cypress County and the County of Newell are particularly exposed to troubles in the shallow gas sector, and observers have warned of collapse of companies unless costs are cut.

Last year the province waived for certain shallow gas producers the portion of local taxes related to the education requisition, and made the difference up out of its own general revenue.

For 2020 however, the provincial government has mandated the near one-third break be extended.

Without extra funds, this will be leaving local counties to make adjustments and make up the difference made by the break.

The RMA said the plans could reduce tax base assessment by 12.4 per cent on average, with 11 counties stung for a 20 per cent loss.

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