MOUNTAIN VIEW COUNTY – The provincial government’s plan announced Monday that it says will support the energy industry while minimizing the impact on municipalities strikes a fair balance, says Al Kemmere, president of the Rural Municipalities of Alberta (RMA).
“This is a much modified approach to dealing with the challenges the oil and gas industry are seeing,” said Kemmere, who is also a Mountain View County councillor.
“This announcement reflects an effort to achieve a fair balance between enhancing oil and gas industry competitiveness and supporting municipal viability.
“The government, I believe, has found a balance to mitigate the challenges. It feels and appears to be a middle-of-the-road approach on this.”
The RMA represents 69 rural municipalities, including Red Deer and Mountain View counties.
Kemmere took park in a teleconference announcing the plan on the morning of Oct. 19.
Under the plan, there will be an exemption from property taxes for three years when drilling new wells and building new pipelines.
It will also eliminate the well drilling equipment tax for new drills, and will see the government lower assessments for less productive oil and gas wells while continuing the recently introduced 35 per cent assessment reduction on shallow gas wells for three years.
It was not known at press time Monday how much the changes will cost rural municipalities.
The plan will create challenges for municipalities, said Kemmere.
“When you see the reduction in the assessed values in property that immediately plays on to the tax roles of those municipalities,” he said. “The challenge is those municipalities are going to be out those dollars.
“Those are items my members will struggle with but I think they will be willing to try to do their part for the economy.”
The government had been considering four options to change the assessment model for oil and gas companies, including a 20 per cent assessment decrease.
Under those scenarios, many rural municipalities would have seen marked declines in tax revenues from oil and gas companies.
By way of example, under the 20 per cent scenario Mountain View County would have received more than $7 million less a year.
Those options have now been set aside, said Minister of Municipal Affairs Tracy Allard.
The plan announced Monday does not address the issue of unpaid municipal taxes owed to municipalities by oil and gas companies.
“We’ve seen $81 million two years ago and $173 million last year of unpaid taxes,” said Kemmere. “If we don’t fix that, all of these modifications are going to be for not because it is going to leave my municipalities without that ability to make sure that tax collection (on oil and gas companies) is treated the same way as every other taxpayer.”
Bruce Beattie is the reeve of Mountain View County.
“It is disappointing that they are still looking at property tax as a saviour for the oil and gas industry,” said Beattie.
The well drilling equipment tax has generated a lot of revenue for the county in the past, he said.
The issue of unpaid taxes from the oil and gas industry remains a concern, he said.
“That needs to be addressed and addressed quickly,” he said.
Tim McMillan, president of the Canada Association of Petroleum Producers, says the plan announced Monday represents a “critical step to help restore investor confidence and preserve and create jobs for Albertans.”
The industry is “committed to continuing to work with the municipalities and the province on this issue going forward to rebuild our energy industry," he said.
Minister Allard said the province plans to develop a plan for longer-term reviews of the regulated assessment system.
