By Cole Parkinson
The Municipal District of Taber is concerned about their growing unpaid taxes from oil and gas companies.
Heading into the New Year, their unpaid taxes are nearing the $5 million mark.
“For me, when I see that number, it’s very worrisome. I just wanted to get a comment from administration on how they feel with the go-forward and speculating options of recovering some of that $4.7 million. Or is that really a number we’re looking at dealing with for the duration of 2021?” asked Coun. Tamara Miyanaga, at council’s regular meeting held Feb. 23.
On Jan. 31, the municipal bank account has a balance of $28,328,227 with a restricted amount of $7,014,322 received from senior levels of government and held exclusively for capital projects. Property taxes levied in 2020 were $20,740,372 and as of Jan. 31, the total amount of property taxes outstanding is $4,684,427. On Jan. 5, a 12 per cent penalty was applied to all property taxes in arrears, in the amount of $534,192.
“With the taxes outstanding of over $4 million, we have reserved just over $3 million as uncollectible and about $2 million of that had been reserved in prior years,” said Bryan Badura, director of corporate services. “With $1 million added in 2020 to possibly uncollectible taxes, that leaves just over $1 million we feel is collectible. We either have tax agreements with the companies or some knowledge the tax will be paid, as well as some taxes related to land. When it’s related to land, we have a method of collecting those taxes.”
A question was asked of administration around the outstanding tax total.
“On the outstanding of $4.6 million, is that the accumulated total or is that the total for 2020?” asked Coun. John Turcato.
Badura confirmed the total was accumulated.
Council also asked about oil/gas leases and if that factored into the total.
“That was, I think if I remember correctly, another $400,000. So we’re really about $5 million in uncollected taxes and lease revenue,” said Reeve Merrill Harris.
Administration stated the overall total would be around $5 million, if leases were factored in.
“For the 2021 budget year, we feel we’ve budgeted for those uncollectible. We tried to budget kind of a worst-case scenario but yes, that is the total,” added CAO Arlos Crofts. “We budgeted, I believe, $2.1 million in uncollectible taxes. It sounds silly to say, but that’s what we’re budgeting. It’s budgeted as an expense, I believe.”
Council also asked for an update on legal advice they had sought for collecting unpaid taxes.
“We submitted a statement of claim and we have received a statement of defence back from that group,” replied Crofts.
With budgeting a massive undertaking each year, council continued to express concern around unpaid taxes piling up moving forward.
“So as we go forward, we’re budgeting 10 per cent of our taxes collected for operation. That is concerning to me as we move forward and those pieces of land or individuals or businesses are receiving services the rest of our ratepayers are paying for,” continued Miyanaga. “I recognize that is part of government and people not paying taxes, but it is concerning. I do appreciate the work administration is doing to collect those monies — but again, my concern is how much further are we going to go down the path of budgeting for uncollected taxes?”
“Some of these companies have chosen who they pay,” added Turcato. “They’re still operating and they’re choosing who they pay and yet if you create enough problems for them, they’ll pay. So is there any way of us legally creating problems with them, so they will pay? Or is that something also we need legal advice on?”
Administration advised council any discussion around legal advice should be moved into closed session.
“The other side to it is expense reduction, right? Adjusting our expenses and operation to match our revenue generation. That’s what we’ve been trying to do, as a move forward point. I get the optics of budgeting for uncollectible, but it’s our current reality,” added Crofts.
With budgets shrinking across the province, and unpaid taxes piling up, councillors expressed worry about continuing to provide a high level of service. As municipalities continue to take on heavier burdens financially regarding policing, financials are beginning to run tight.
“I think we have tasked administration for the last two years for sure to slim down, but I’m starting to feel like we’re getting pretty skinny on what our operations are when we’re looking at how often we’ll grade and gravel and remove snow,” remarked Miyanaga. “Those are day-to-day functions and it’s always a concern to me what we do. I know we lived in some good times before, but how are we going to move forward? I do appreciate the work administration’s done on our budget for certain and creating efficiencies in our operation in general. It’s definitely allowed us to continue at the rate we are.”
“I hate to use this term, but this is definitely a download when you’re budgeting for, and we have no choice and I know that’s fiscal responsibility we’re dealing with,” said Turcato. “But when you’re budgeting for a 10 per cent reduction in collectible taxes, that’s nothing more than a download from the provincial government. They’re not making any rules, so we can collect on it. Every other class you have means to collect, but not for oil and gas. That’s nothing more than a download.”
While discussion had been primarily around oil and gas taxes, a question was asked if other facets played into the nearly $5 million in unpaid.
“Of the $4.6, how much of it is accumulated because of oil and gas versus the others. Whether it be farmland or residential?” asked Coun. Leavitt Howg.
“We typically don’t reserve anything for farmland or residential. We have almost 100 per cent collection on those taxes,” replied Badura.
Howg stated his opinion this proves the M.D. should continue to try and diversify economically moving forward.
“I think that shows, over the years, oil and gas is such a major part of the M.D. and we’ve become very reliant on the non-residential paying their taxes, even in hard times. I think it shows we really need to make sure we diversify and find other means and not just relying on oil and gas to pay a major part of the M.D. budget.”