County loss could be city’s gain under tax changes
By COLLIN GALLANT on September 12, 2020.
cgallant@medicinehatnews.com@CollinGallant The City of Medicine Hat may stand to gain on proposed property tax changes for oilpatch operators that Alberta’s counties say will threaten their existence. New Municipal Affairs Minister Tracy Allard is now doing a new round of meetings with leaders of counties and municipal districts who say they stand to lose 20 per cent of their tax revenue if changes go ahead next year. Similarly, Medicine Hat assessors use the same manuals, meaning that the municipality could see a saw-off if its energy company has to pay less local tax. However, changes for its wells located outside city limits could mean lower payments by the city’s energy company. Mayor Ted Clugston touched on the subject this week while discussing general budgeting and the potential tax shock in rural communities. “It will affect us a little bit, but we pay it and we collect it (inside city limits),” said Clugston. “We might have a net, overall, corporate bump, believe it or not. Because we won’t have to pay as much out of NGPR.” The Natural Gas and Petroleum Resource unit, often called Prodco, pays about $1.4 million per year in property taxes to jurisdictions in Alberta where it operates, according to the most recent 2018 figures. That includes $170,000 to the municipal corporation of Medicine Hat, but also $830,000 per year to Cypress County and a combined $420,000 to the counties of Forty Mile, Vulcan and the Special Areas Board. Energy division officials told the News that by their calculations, the municipality could see tax revenue decrease by $350,000 to $430,000 per year from Prodco and several other producers. That loss would be made back by an increase to the general tax base. NPGR’s payments would decrease by $300,000 per year. It’s not known if that includes taxes paid to other jurisdictions. Other urban municipalities would also be effected. The City of Brooks discussed a resolution this week noting support for the RMA in the dispute, saying changes would decrease that city’s assessment base and decrease revenue by about $75,000. That’s nominal compared to the potential effect on the County of Newell, which estimates its tax revenue on tens of thousands of wells would fall by as much as 20 per cent, or $10 million. Cypress County says it stands to lose $7.8 million per year in revenue from linear assessment changes, an amount officials say can’t be made up through cuts alone, and tax increases to other classes would be required. Oil and gas producers have lobbied for several years that assessment models last updated in the 2000s need to better reflect today’s value with depressed energy prices. In 2019 and 2020, the province required counties to eliminate about one third of the tax requirement on certain shallow gas properties (about equal to the education requisition), to help struggling producers while the assessment model was updated. A decision is due this fall, according to recent statements by Municipal Affairs. 18-17
