By Cole Parkinson
Municipal District of Taber councillors have been presented with the final operating and capital budgets for 2021.
At council’s regular meeting Apr. 27, councillors had one final look at the budget before putting it in motion for the year. The 2021 proposed final operating budget projects a $972,946 operating budget deficit, which includes a non-cash expense of $4,309,199 for amortization.
The budget projects to generate $3,012,466 in cash from operations — which will be allocated to capital expenditures or transferred to reserves to fund future expenditures.
Oil/gas unpaid taxes continue to hamper the municipality as a projected net decrease of $630,421 from 2020 is listed in municipal property tax revenues, including projected uncollectible property taxes of $1,500,000.
In terms of mill rates, the budget sees a two per cent increase to residential and non-residential property taxes, and an increase of 7.5 per cent in farmland. Administration’s report also stated the municipality has “significantly reduced operating expenditures across the organization to accommodate the reductions in the assessment base.”
Their total taxable and GIL assessment fell from $2,031,593,470 in 2020 down to $1,992,579,600 for 2021, which was nearly two per cent. A question was asked to administration about the decrease in assessment.
“From 2020 to 2021 there was an approximate two per cent decrease and that was projected to be a little bit higher. We projected that to be around three per cent,” explained Bryan Badura, director of Corporate Services. “However, as the assessment from oil and gas properties was coming off of our assessment rolls, we saw some solar projects that came on and are now assessable. In the future, I still project some more reduced assessments from oil and gas properties. There are still some operating oil and gas companies that are in financial difficulties or under orders from the Alberta Energy Regulator we possibly will see additional reductions in assessments from that.”
Another question was asked around when defunct oil companies come off the tax rolls.
“The assessment is currently still there. I don’t expect it to come off for the 2021 year. Would likely have to address that, if it remains unpaid, with the $1.5 in budgeted uncollectible property taxes. Going forward in future years, there is potential some of those licences will maybe transfer to other operating oil and gas companies and that assessment may stay on the assessment rolls. However, if there are properties or assets that fall into the Orphan Well Fund, I believe those will, for sure, come off for the 2021 tax year,” answered Badura.
With the M.D. dealing with large amounts of unpaid taxes, an inquiry from council came in asking about how taxes were transferred between functioning companies taking over defunct companies. They asked if the new company taking over the lease would then be responsible for paying the back taxes.
“We definitely have pursued that in the past when those events come about. However, with the court decisions with regard to properties that go into bankruptcy, property taxes for liner properties are not considered secure. Through Canada court decisions, property taxes are not considered secured liabilities,” stated Badura.
The Alberta Energy Regulator’s Directive 067 was also touched on.
The directive states “acquiring and holding a licence or approval for energy development in Alberta is a privilege, not a right. This directive ensures this privilege is only granted to responsible parties. It sets out requirements for applying for, maintaining and amending licence eligibility. It also identifies the circumstances in which the AER may revoke or restrict licence eligibility.”
“It’d be administration’s hope they would do that. That would be our expectation in light of the new directive 067,” added CAO Arlos Crofts. “That’s something we can continue to try and leverage, as well.”
The proposed operating budget also includes increasing the minimum amount of property tax payable per parcel from $30 to $40 and a two per cent cost of living adjustment.
A reduction of overall salaries and wages to $7,336,491 ($8,136,024 in 2020), which equals a savings of $799,533.
Council also posed a question around equipment being used in the M.D.
With the focus being shifted to maintenance and shoulder pulls instead of heavy road construction, they asked if more equipment would be left sitting on the sidelines.
“The equipment won’t be used as much as it was. I got a couple scrappers that won’t be used as often, but we’re going to want to keep those in case we start doing builds again. For right now, that’s about the only thing you’ll see sitting in the yard a little bit more than you used to,” replied Stu Weber, director of Public Works.
While two per cent increases to residential and non-residential and a 7.5 per cent to farmland was brought forward, one councillor suggested changes.
“Two of the three is based on essentially market value — residential and non-residential. Farmland is based on a regulated rate. I look back at a 2019 policy committee, I found some 2018 assessment values with non-residential equalling $1.43 billion, residential $763 million and farm regulated $129 million,” said Coun. Leavitt Howg. “If we apply the market value to those 2018 rates, there are 290,000 acres of drylands in the M.D. and at approximately $3,000 an acre, which is $870 million and 354,000 irrigation acres at approximately $8,000 an acre, which is $2.8 billion. And 325,000 acres pasture acres is $421 million. So as you see, and you can interpret it whichever way you want, farmland at 2018 market wave is well over $4 billion.”
Howg suggested bumping farmland to a higher percentage.
“Knowing this, is it fair the non-residential is paying the lion share of the tax burden. And then why is the tax burden split up 75 per cent to non-residential, 15 per cent to residential and 10 per cent to farmland. To me, to be fair and equitable to all ratepayers, and ratepayers, not just the ones who vote, I feel the tax burden needs to be applied differently. I would like someone if they could tell me why always expect non-residential to pay the lion’s share. I feel it is unfair, especially since they cannot vote for a council member, in or out. We need to make sure the direction of the M.D. is sustainable and stable for the foreseeable future. To attract new businesses and to keep existing businesses, we need to show we support them and are willing to listen to their needs and concerns — but also act on them if needed,” he said.
“The mill rate changes proposed in the final budget are a concern to me for the following reasons — non-res to me, have been the hardest hit the last few years, through economy and also mill rate increases. A minimal increase here has a very large dollar increase. Farmland is based on a regulated rate that is already low and a large percentage increase is needed to see any kind of dollar impact. When we look at the neighbours to the west, we are close to one-third of their mill rate and they have very much the same type of farmland. Under the proposed increase of 7.5 per cent, it essentially equates to about 18 cents per cultivated acre.”
He also suggested a change within the capital budget.
“I also think when it comes to the capital budget, we should reconsider the water delivery service to the M.D. Park. If our roads are our priorities, why are we spending so much on a recreation asset? Especially when we are looking at a deficit. I believe this is the right thing to do to keep the M.D. sustainable and a thriving place to do business and to keep our level of service where it is.”
Howg made a motion to move the 2021 final operating budget with the following amendments — a zero per cent increase to non-residential mill rates, a two per cent increase to residential mill rates and a 12.5 increase to farmland mill rates. And amendments to the 2021 capital budget, that the M.D. of Taber park water delivery project be removed and added to the 2022 budget deliberations.
The motion was defeated 6-1 with Howg, the lone vote in favour.
“My first comment is farmland is not assessed at market value. It is unique to other methods of assessment and it is not based on market value, it is based on production,” stated Coun. Tamara Miyanaga.
Council did continue conversations around the water project.
“I do wonder if the value in the water enhancement at the park — is that something we should still be continuing or not?” asked Deputy Reeve Jen Crowson.
“I think originally it was put on the list as something Ag Services was going to do, and I don’t remember what the dollar number was they had in mind,” replied Reeve Merrill Harris.
“I think it’s a bigger project than maybe what our guys, and I don’t want to say they aren’t qualified to do it — but liability and what not, I think it’s a project bigger in scope than just a two-inch line coming in over the hilltop. I think if we’re going to do that project, (we will) need to have some engineering done and all that.”
Administration confirmed the project wouldn’t be completed this year, but funds would go towards engineering.
“It likely wouldn’t be completed until 2022, 2021 is when you probably would see some of the design work.
“From what I can tell from a historical context, what you have presented in this budget is an actual engineered estimate in terms of costs, which does include some contingency. Previously, I don’t think it was necessarily an engineer’s estimate that had been previously presented to council,” stated Crofts.
“I will be in favour of including this project. We looked at it with MSI and I do realize there was a big change because at one-time staff said ‘we can do it, no problem’ and then upon review, it was decided it had to be engineered, which is for the best for our communities,” added Miyanaga.
A motion to adopt the 2021 financial operating budget and the 2021 capital budget was carried 6-1 with Howg the lone opposing vote.