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Lakeland municipalities could lose millions with GOA big-business assessment cuts

MLA says talks will continue as municipalities tell residents to 'brace for impact' of GOA's new big-business tax plan

As officials from municipalities around the province urged residents to contact their MLAs to stop a government plan they fear could see upwards of $300 million in tax dollars pulled from municipal budgets, Fort McMurray-Lac La Biche MLA Laila Goodridge says she is listening.

A day after a group of 100 elected officials from rural municipalities across the province — including MD of Bonnyville Reeve Greg Sawchuk and Lac La Biche County Mayor Omer Moghrabi — demonstrated outside the Alberta Legislature against a proposed change in how large oil and gas industry tax-payers are assessed, and  just hours after municipal officials issued press releases urging residents to express their concerns to provincial MLAs, Goodridge told Lakeland This Week she is wants to hear "both sides".

"There is an ongoing debate between industry and municipalities about the assessment values for oil and gas properties. It is important to find a careful balance to ensure both sides are respected and heard," Goodridge said.

The debate is over pending legislation that could create a new formula for how provincial officials will assess the values of large-scale oil and gas taxpayers in the province. Assessment values form a part of the formula that sets tax rates in municipalities.  In one of four scenarios recently presented to the province's rural municipalities, upwards of $300 million in collected tax revenue could disappear in next year's budget if assessed property values are reduced.  In Lac La Biche County, the province's reduced assessment values could mean revenue reductions of upwards of $6 million — about 10 per cent of the county's annual operating budget.

The ongoing discussions over the possible assessment changes have no specific timeline to be finalized, said Goodridge, following Thursday's final day of the summer Legislative session, saying only that discussions and consultations were expected to continue into the fall.

"No decisions have been made at this time," she told

The assessment changes under discussion would likely see evaluations of oil and gas properties going to a market value status as opposed to the current replacement value model. The current model of assessment evaluation has been a concern expressed vocally by oil and gas industry officials. In some cases, legal actions have been taken by industrial taxpayers towards their tax-collecting municipalities.

In Lac La Biche County, the tax revenue collected from the rural non-residential ratepayers, including oil and gas plants, wells and pipelines, makes up 85 per cent of the overall revenues collected each year.

Flawed planning

Moghrabi says that by "artificially lowering" the assessments, the province is pitting municipalities against big business. But it's not so much that conflict that has municipal officials concerned, it's the process of the plan. With municipal officials only being told of the four assessment options a few days ago — despite what provincial officials say has been a consultation process starting last December with industry and government officials — Moghrabi says councils and rural residents have been left in the dark.

"Our argument is with the process. Oil and gas is a crucial part of our community. But we didn't find out about this until this week. The process is flawed," he said.

Attending Wednesday's rally, Moghrabi said one way the demonstrators showed their concern was by showing their backs.

"We turned our backs to the building to show that that they had turned their backs on municipalities," he said.

The mayor also said the demonstration was to show provincial officials that rural municipalities stand united in their concerns over the new assessment models — even if some of the proposed scenarios actually increased funding. With the support of the Rural Municipalities Association (RMA) and the Alberta Urban Municipalities Association (AUMA), Moghrabi says municipalities are taking a stand.

"In the first scenario, I think we actually make money on their model — but that's not the point. It doesn't mean that we will allow them to walk all over other municipalities," he said.

According to a report issued by the RMA this week, of the 67 counties and municipal districts the association represents, most will see revenue losses between seven and 20 per cent to their annual budgets.

Tax breaks could see tax hikes

In Lac La Biche County, the worst-case scenario cutting almost $6 million from this year and ongoing budgets, will likely mean tax hikes, reductions in service levels, project cancellations and higher user fees. 

The mayor realizes the pressure that many people are already feeling — and he hopes that residents help to get that point across to their provincial officials.

Whether you're in Bonnyville, St. Paul, Athabasca — or Northern Sunrise County (the organizing municipality of Wednesday's rally) ...The Province has chosen the worst possible time to shift the tax burden to those who can least afford it. Everyday residents, farmers, and small businesses are being asked to pay more," he said. "I do understand that the oil and gas sector has been struggling, but cutting municipal and school taxes by deciding that oil and gas properties are now worth less is not the way to stimulate the economy or put Albertans back to work. The services that municipalities provide are some of the most necessary and efficient in the public sector.” 

Goodridge was asked if the proposed changes only related to oil and gas sector assessments, but she didn't respond specifically to that question. She was also asked why the province was looking at altering the assessment model that has been in place since 2005, but she didn't respond directly to that question. She did say that she hopes to see all avenues and options included in future discussions and consultations on the issue.

 "It is important for the government to understand and take into consideration the scope and implications of potential assessment changes when determining how best to support municipalities and industry in economic recovery," she said.

Moghrabi and municipal officials from across the Lakeland are encouraging their residents to contact local MLAs to urge them to advocate against the oil and gas assessment changes.