BONNYVILLE - Changes to the way the province assesses wells, pipelines, machinery, and equipment could come at a cost to the MD of Bonnyville.
“Essentially what this is, is a reduction in taxes for industry... We know very well as far as the tax paid by industry right now, like the large oil companies, our cost, the taxation from a municipal-level, is less than two per cent. It’s not something that’s overly cumbersome for them, and yet from the municipality’s standpoint, a 20 per cent reduction (in revenue) would have a significant impact on residents,” exclaimed MD Reeve Greg Sawchuk, noting it could end up cutting their income by $15 to $20-million.
“There’s only a few ways (you can make that up), you either cut back or increase taxes on everyone else,” he continued.
This could be the route the MD is forced to take, should these changes come into affect.
One area the municipality would have to consider is the non-residential mill rate, which they have “worked with companies in the past couple of years and reduced the mill rate and their taxes, but going forward, we may be going in the opposite direction.”
A letter from Alberta Municipal Affairs Minister Kaycee Madu explains how the assessed values of these assets for taxation purposes hasn’t been updated since 2005, even though the responsibility of assessment of these types of properties was transferred from municipalities to the province in 2018.
Over the past year, the province has been reviewing the assessment models “to ensure new technology is accounted for, current cost structures and industry practices are reflected, and result in a fair and transparent relative distribution of taxation,” the Jan. 2 letter details.
As part of their analysis, Alberta Municipal Affairs collected input from working groups, which revealed “potentially significant shifts in assessment.”
Madu notes, that due to the impact any amendments can have on communities and the oil and gas industry, the province will be conducting additional engagement with industry and municipal associations this year.
“This is something that’s definitely at the forefront for us, because not only will it affect the MD, but it will also affect all of our urban neighbours because if we’re cut back that (amount), we won’t be able to support other projects on the go,” Sawchuk expressed.
The provincial government is predicting to have a final decision on the assessment model review in the spring, which means any changes will be deferred until 2021.
For the time being, Municipal Affairs will be relying on assessment year modifiers for the 2020 tax year. These are “similar to a consumer price index, and are used to adjust the property assessments for regulated industrial property from the base cost year in order to reflect current values,” the letter explains.
For the 2019 tax year, which uses a company’s 2018 assessment, the modifier will be based on percentages of 1.2 for wells, 1.02 for pipelines, 1.47 for electric power systems, telecommunication carriers will be based on 1.15, while cable distribution undertakings will be 1.38, railways 1.41, 1.4 for machinery, one for dry arable, dry pasture, and woodlot farm land, and finally, 1.03 for irrigated arable farms.
The 2020 tax year sees a decrease of 0.67 per cent for wells, but increases by just shy of 0.5 per cent for pipelines, .07 per cent for electric power systems, 0.35 per cent for telecommunication carriers, cable distribution undertakings will be up by 0.36 per cent, railways are jumping by 3.55 per cent, while machinery and equipment will go up by 0.71 per cent.
Both farm land categories are remaining untouched for the 2019 assessment year.
Sawchuk is confident the issue will be discussed at the Rural Municipalities of Alberta’s (RMA) upcoming conference, and told the Nouvelle the MD would be responding to the province’s letter expressing their concerns.
