County residents and businesses will pay the price of Province’s proposed oil and gas assessment models

County residents and businesses will pay the price of Province’s proposed oil and gas assessment models

If approved, the changes would significantly impact residents and businesses in Lacombe County

Lacombe County council is opposed to a Province of Alberta proposal to change how oil and gas wells, pipelines and associated machinery and equipment are assessed for property tax purposes.

If approved, the changes would significantly impact residents and businesses in Lacombe County, either by significantly higher municipal taxes, reductions in services, or a combination of both.

“There is no doubt that the last few years resulted in some challenging budgets, and we didn’t expect that to change anytime soon,” said Reeve Paula Law.

“However, municipalities have been hit again and again, when combined with increased policing costs, reduced grant funding, and COVID-19 related property tax deferrals. We have been able to shoulder much of that burden for our ratepayers and businesses, but if these assessment model changes go through, it will have huge impacts that we won’t be able to absorb through our reserves.”

On July 30th, Lacombe County Council met with Lacombe-Ponoka MLA Ron Orr to express their concerns and ask for his support for Lacombe County and the other rural municipalities impacted by these proposed changes.

“While we are strong advocates for the oil and gas sector and are proud of the many companies that call Lacombe County home, with the limited information we have been provided with, we fear that these changes won’t benefit these companies.

“With limited benefits to these companies, we simply cannot support a change that potentially will have a significant impact on other businesses in the County and our residents,” said Reeve Law. “At the end of the day, there is only one taxpayer, whether they are paying taxes federally, provincially, or locally.”

Potential impacts to Lacombe County

The Province is proposing four different new assessment scenarios, all with varying impacts to industry and municipalities.

While a decision has yet to be made, the Rural Municipalities of Alberta (RMA) suggest that representatives from the oil and gas industry favour Scenario D.

This scenario would have the most significant adverse effect on Lacombe County, and many other rural municipalities.

The following outlines the potential financial impacts to Lacombe County based on these four scenarios:

– Scenario A (a two per cent loss of revenue would come to a tax loss of $895,547.

– Scenario B (a three per cent loss of total revenue) would come to a tax loss of $1,123,104

– Scenario C (a four per cent total loss of total revenue) would come to a tax loss of $1,511,619

– Scenario D (a five per cent loss of total revenue) would mean a tax loss of $1,998,460.

These amounts are based on the 2019 Mill Rate.

“The information we have received from the Rural Municipalities of Alberta (RMA) indicates that there is no data or information, from either industry or the Province, that links the proposed assessment reductions with enhancing Alberta’s oil and gas company’s competitiveness,” said Law.

“Further, smaller, locally owned companies will benefit less from the revised assessment model, and many may face significant assessment increases. This puts them at a competitive disadvantage with larger, international companies who have absolutely no obligation to reinvest those savings in Alberta.”

In addition to these concerns, Lacombe County felt there was a perception concerning a lack of transparency, particularly about future impacts, since the proposed changes reflect a one-year snapshot.

Without this information, there is no indication of the financial implications for Lacombe County in 2022 and beyond.

“Despite what the government has said previously, municipalities do not have room for increased taxation. While we could cover the cost by reducing staffing and services, there is no benefit to our residents: they would be paying the same and receiving less,” said Law.

More information on the proposed changes, along with the impacts, can be found in the Assessment Model Review Impacts Report – Lacombe County and the Rural Municipalities of Alberta Assessment Model Review – Outcomes Summary.

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