Tax rate freeze doesn't help gap between residential and industrial

LAC LA BICHE - While Lac La Biche County councillors hope their decision to freeze the municipal portion of the 2022 tax rate will be looked upon with appreciative eyes from residents, there are others eyes watching the tax decisions. 

For the last five years, financial officials in the provincial government have been urging Lac La Biche County councillors to narrow the tax rate margin between residential properties and rural industrial sites. Provincial officials have mandated that Lac La Biche County and a handful of other rural municipalities in Alberta bring the gap between their current residential and industrial tax rates to within a 5-to-1 ratio. 

Lac La Biche County council's decision on May 3 to freeze mill rates in all four of the municipality's tax categories for the third consecutive year is keeping the ratio at 5.89 to 1.

Since 2017, Lac La Biche County has been designated as a Specialized Municipality, allowed through provincial legislation to create four municipal tax rates in urban and rural service areas for residential and non-residential ratepayers. In standard municipalities, mill rates are divided into only residential and non-residential categories, meaning that a mom-and-pop clothing store in a downtown setting would pay the same municipal mill rate as an industrial facility in a business park.

Big difference

The specialized municipal mill rates in Lac La Biche County currently sit at 3.12 for all residential taxpayers in either the urban service areas around the main hamlets and the rural service areas in the rest of the municipality, 10 for businesses operating in the urban service areas and 18.3647 for businesses and industry operating in the rural service areas. That means a home in the Lac La Biche hamlet assessed at a million dollars would pay $3,120 for its municipal portion of annual taxes, a million-dollar business on Plamondon's main street would pay $10,000 for its municipal portion, and a million dollar business in rural Rich Lake would pay $18,365. The margin between the Rich Lake business and the Lac La Biche home is currently at a margin of 5.89 to 1.

In recent years, the margin and the assessment levels in general have been something that several large industrial companies have expressed concerns over. Oil company Canadian Natural listed 52 Alberta communities in a formal complaint to the Municipal Government Board in 2020, requesting reductions of up to 50 per cent in taxation for certain portions of their operations. That matter is ongoing.

When the Province first made the request to get to a 5:1 ratio, in 2017, industrial ratepayers in Lac La Biche County were paying municipal mill rates almost 7.5 times more than residential ratepayers. The current gap of 5.89:1 has been narrowed after a four per cent hike in the residential rates in 2018, and a slight reduction in the rural industrial mill rates. But it has remained unchanged since 2019.

Changes

After three consecutive tax years with no change to the municipal rates, Lac La Biche County councillors are cautioning residents that changes will eventually have to come, either voluntarily or mandated by the Province.

"It is something we will need to catch up on eventually," said county councillor Lorin Tkachuk.

Councillors are hoping that throughout the  coming year, residents will be reminded that rates will likely increase in 2023.

In order to reach the 5:1 ratio, based on current rates, it would mean an additional 20 per cent increase in residential mill rates, a reduction of 12 per cent to the rural commercial mill rate, or a combination of both. A 10 per cent reduction in municipal tax collection from rural commercial ratepayers would equate to  $6.1 million hit to the current Lac La Biche County tax revenues. A 20 per cent increase in the residential mill rate would add about $400,000 to the municipal coffers.

The Regional Municipality of Wood Buffalo, one of the province's other specialized municipalities, is also trying to bring down the tax ratio between residential and rural industries. RMWB councillors passed their tax bylaw at the end of April, increasing all residential mill rates by seven percent, bringing their ratio to 6.9-to-1. According to Lac La Biche County comparative documents, Wood Buffalo, at one point, had a ratio that saw rural industrial owners facing municipal tax rates almost 20 times more than rural residential ratepayers.

Provincial officials have yet to issue a formal mandate to municipalities regarding the 5:1 ratio requirement.