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HomeMy WebLinkAbout2020-09-16 UPDATE - 2020 Assessment Model ReviewUPDATE - 2020 ASSESSMENT MODEL REVIEW It would be impossible to live in our Newell community and not be aware of the importance of the oil and gas industry. Helping us all to prosper, it has been a powerful economic driver for decades throughout our province for which we are grateful. Our Alberta and Canadian oil and gas industry strives to be innovative, adaptive and safe. The ongoing and diverse challenges of working in the oil and gas business are acknowledged and certainly felt within our province and local communities. The recognition and understanding of those challenges unfortunately do not diminish the national and international influences beyond our local control that face and obstruct the industry. At the present time the Government of Alberta is considering changes to the 2005 assessment model that determines rates for regulated properties such as oil/gas wells and pipelines. This review began in January 2020 and was made public at the end of July 2020. Stakeholders involved were the Rural Municipalities of Alberta (RMA), Alberta Urban Municipalities Association (AUMA), Canadian Association of Petroleum Producers (CAPP), Explorers and Producers Association of Canada (EPAC), Canadian Energy Pipeline Association (CEPA), and the Canadian Property Taxpayers Association (CPTA). According to the stakeholder engagement plan, the intent of the review was to “enhance industry competitiveness while ensuring the ongoing viability of municipalities”. It is RMA’s and our Council’s opinion that neither of these intentions has been met in the options presented from this review. Important to consider is that any assessment model is meant to provide an objective, data driven method to valuing properties in the province for the purpose of taxation, not to enhance a particular industry’s attractiveness. Therefore, changes made to regulated assessment models should be based on new information, new methodology, and an accurate appraisal of new technology. If indeed taxes are reduced for oil and gas companies based on the 2020 review, there is no obligation for national or international companies to reinvest those savings in Alberta. As well, most of the tax savings appear to support larger companies, rather than the smaller ones. As a result of the suggestions from this process, much provincial concern has been expressed by rural municipalities to our MLA’s, the Premier and to the Minister of Municipal Affairs in the last seven weeks. On August 25th Premier Kenney made changes in his Cabinet appointing Grande Prairie MLA Tracy Allard as the new Minister of Municipal Affairs. On September 1 Minister Allard held a meeting with southern Alberta municipalities to discuss the issues involved with this latest assessment review. A common concern was that the process lacked transparency and compromised the required objectivity of the regulated assessment model. For this reason, the Minister was urged to restart the process. However, she told us that a decision would be made by the government based on the Assessment Model Review by the end of October. She also stated that the worst case “Scenario D” recommendation was off the table. What does that mean to the County of Newell? With the remaining three scenarios, loss of revenue for us in 2021 would still range from $7-9.3 million. Our net tax levy is $30 million and so a 24-31% impact on net taxes collected. This would be in addition to the 2019 Shallow Gas Initiative loss of $3 million in tax revenue, as well as $858,000 phased in annually for new rural policing costs, both mandated and imposed by the province with $286,000 coming due in 2021. Until municipalities know the actual assessment decision reached by the provincial government with associated details, it is difficult to project real impacts. Presently it could also be assumed that an additional 6-7% reduction in tax revenue will occur each year until the wells and pipelines hit a fully depreciated state of 10% if recommendations are enacted. All changes in assessed values will reduce the property tax revenue that rural municipalities rely on to provide services. The weight of the non-residential tax burden will have to be shifted in combination with a reduction of services. The long-term sustainability of our rural municipalities will be endangered. The County of Newell Council will continue our lobbying efforts through communication with our residents and education of provincial officials. Once the Province and Municipal Affairs inform us of their decisions, it will be possible to look at the facts to determine how we move forward. If you have questions or suggestions, please feel free to speak to your local Councillors or Reeve. Contact information is available online: http://www.countyofnewell.ab.ca/p/our-councillors Other contacts include our MLA Michaela Glasgo at (587) 270-5111 or Brooks.MedicineHat@assembly.ab.ca and Municipal Affairs Minister Tracy Allard at (780) 427-3744 or minister.municipalaffairs@gov.ab.ca Local governments like the County of Newell in Alberta work for the same residents and taxpayers that the provincial government does. All municipalities provide many critical services such as roads, bridges, fire protection, agricultural support, water and wastewater, libraries, recreation, Newell Foundation, Family and Community Services. Such responsibilities require long term planning and financial reserves, purposely collected for future capital replacement. Rural municipalities want to support the sustainability of our Alberta oil and gas industry, but not at the expense of our own community’s sustainability. Both are needed and must be valued going forward.