Rural finances remain precarious | The Western Producer

Alberta’s rural municipalities are once again about to calculate how many millions of dollars in unpaid property taxes they are collectively owed by oil and gas companies.

It will likely be more than the $245 million announced in February, said Paul McLauchlin, president of the Rural Municipalities of Alberta. However, he hoped the increase isn’t as large as the jump from $173 million the previous year, itself a substantial uptick from $81 million in 2019.

The amount will be calculated in November once things settle down following the province’s municipal elections on Oct. 18.

“I would probably say if it increased significantly… that would be disastrous.”

Although municipalities agreed to provincial tax breaks in 2020 to help Alberta’s ailing energy industry, some oil and gas companies have simply refused to pay any of their municipal taxes.

“We are seeing 57 percent of those non-paying companies are still operating, making no gestures to enter into payment plans or any other mechanisms that can be used to pay those taxes,” said McLauchlin in an earlier interview.

He said recently there is now “some cautious optimism” among municipalities due to rising oil and gas prices, which have surged to their highest levels in several years. It is creating the expectation that the reviving cash flow of defaulting companies will prompt them to either pay what they owe in full or enter into payment plans, he added.

It is only part of a bigger problem that includes oil and gas companies going into receivership, resulting in their municipal tax debts being written off, said McLauchlin. RMA wants to get a better handle on this amount as part of its overall calculations in November.

“Sadly, and again, this is just the spectre of mathematics in my head, but definitely I would expect that number to be just as shockingly high.”

Rural municipalities rely on property taxes to help manage about 75 percent of the province’s roads and about 60 percent of its bridges. Producers not only need the rural road network to get their goods to market, it is also vital to plans to strengthen the agriculture sector, helping diversify an Alberta economy heavily reliant on oil and gas.

The loss of taxes from oil and gas companies means rural property owners such as farmers will pay more taxes or face cuts in municipal services. Producers in many parts of Alberta were slammed this year by drought and heat waves, said McLauchlin.

It would be a “sad situation if we have to increase any taxes on farmland at a time when folks are having trouble feeding their livestock, so we really have to make sure again that we have a predictable, long-term plan that allows us to have the resources available to do the best job we can.”

During the federal election campaign, the RMA released recommendations as part of its platform that included improving funding for rural infrastructure.

As part of a meeting with the Alberta Rural Municipal Administrators’ Association, provincial Municipal Affairs Minister Ric McIver heard concerns about the tax situation, said McLauchlin. “And his comments (were) that a process is in place where we’re looking at legislative solutions this fall when the legislature sits.”

Municipal Affairs press secretary Greg Smith did not reply to Western Producer interview requests.

McLauchlin said McIver indicated at the meeting that some of his ministry’s efforts must first be co-ordinated with the Ministry of Energy.