Okotoks councillors are expressing their “extreme concern and opposition” to the Province’s proposed changes to the assessment model for regulated industrial properties.
The Province put out a position paper outlining potential adjustments to linear assessment to make oil and gas properties in Alberta more competitive.
“To-date that hasn’t had a large impact on urban municipalities in so far as the majority of linear assessment, or oil and gas wells, pipelines, machinery, and sites and facilities, tend to be located in the rural parts of the province,” said Jeff Greene, Okotoks director of development services.
However, he said there is a challenge with the recommended reassessment model, which would be moving away from a market-based system in favour of a system that would reduce the assessment and cost of machinery and equipment on linear taxes to oil-producing firms.
“It has a redistribution affect in terms of the overall tax pie in the province, because it lowers it on the rural linear side of things and then has the negative consequence of actually increasing it on other aspects of the tax base, such as on our education tax requisitions,” said Greene.
He said urban municipalities are concerned the tax burden on their residents will be increased as the government turns to a model favouring the oil and gas sector.
In addition to a rise in the education requisition amount, he said policing costs will also shift from rural to urban shoulders.
“On one hand the Province had actually put in the new provincial charge to some of the rurals, but as a result of this revised assessment approach it will actually rebalance some of those policing costs and shift them from what was an increased rural share to an increased urban share,” said Greene.
Seeing these tax requisitions go up will impact the Town’s ability to hold its zero per cent tax increase, he said.
In response, Okotoks council submitted a letter to the Province indicating its concern with the proposed change.
The letter opens with, “The town of Okotoks is expressing extreme concern and opposition to the recently announced proposed changes to the assessment model for calculating assessed values on regulated designated industrial properties (DIP) such as oil wells, pipelines, and equipment at well sites.”
It goes on to outline the Town’s concerns and suggests the positions of the Alberta Urban Municipalities Association and the Rural Municipalities of Alberta should be followed, which would see the Province abandon its recommended assessment model, provide tax incentives through taxation rather than assessment, reduce its education requisition levies and have subject-area experts help develop a market-based, equitable assessment model.
Coun. Tanya Thorn, who is on the board of directors for the AUMA, said the organization is advocating to have a principle review completed.
“Right now they’re recommending a change to the assessment system that’s only looking at one piece to solve today’s problem of decreased revenues,” said Thorn. “We’re moving away from that principled approach of value equals value.”
Rather than putting new legislation in place, AUMA is arguing the Province should be making a tax regulation that may be temporarily implemented to respond to the current economic situation, she said.
The proposed assessment system doesn’t meet the principles of an effective system to address that concern, said Thorn, and it will negatively impact urban municipalities that tend to have very little oil and gas infrastructure within their borders.
“There’s an education tax increase probably coming our way this year – which we shouldn’t be collecting,” she said. “This should be a provincial collection.”
In addition to sending a letter to the Province, Thorn said it’s time for urban municipalities to start educating their MLAs and ministers on what they actually do. The need for communication became clear in discussion regarding the assessment model and potential increased taxes, she said.
Some believe that when municipalities have an accumulated surplus or money in reserves it can be used to offset a higher provincial requisition, she said.
“There’s a lack of understanding out there with this current government as to what those two items actually mean in our budget, and that we can’t take accumulated surplus of roads and assets and use that to pay for lost taxes – it doesn’t work that way,” said Thorn. “We really need to be clear what those things in our budgets do.”
