Change in taxation could bring major change

Susan Thompson
South Peace News

Proposed provincial changes to linear assessment that saw municipalities from across Alberta protesting at the Legislature could bring three potential increases to taxes within the Town of Peace River.

Northern Sunrise County and numerous other municipalities across the province have warned their ratepayers that proposed provincial changes to how oil and gas taxes are assessed could cause huge increases in property taxes or severe reduction in services to make up for the lost revenue.

Peace River town council has reviewed how that could affect their urban municipality if the changes are approved.

Director of Corporate Services and Economic Development Greg Towne says the changes to the Town’s assessment are estimated to be a reduction of around $1.6 million under any of the province’s four proposed scenarios.

It will mean a revenue loss of $28,300 in the first year.

The shifting of education and possibly seniors housing taxes from rural municipalities to urban could also affect the town.

“As education taxes are based on total equalized assessment, a reduction in assessment in rural municipalities means that urbans will have more assessment in relation – essentially a larger percentage of a smaller assessment pie.

Under Scenario C the projected impact would be a six per cent increase in education taxes collected within towns. On a house assessed at $315,800 this would be an increase of $50.54 in education taxes,” Towne says.

“A similar percentage increase could be expected for requisitions for the housing authority.

This is an unfortunate impact to urban ratepayers as education taxes are shifted from industrial [oil and gas] assessments to residential and commercial assessments.”

Finally, intermunicipal cost sharing agreements could also be affected.

“Reductions to rural assessments will inversely increase Town assessments from a percentage perspective; this was known during negotiations and, frankly, a reasonable circumstance as assessment is a proxy for ability to pay. It is unknown if assessment changes will impair any of our partner’s abilities to honour these existing agreements,” Towne says.

Regionally, he says the M.D. of Peace would see revenue reductions of approximately six per cent, and a reduction of around 10 per cent for both the County of Northern Lights and Northern Sunrise County.

Towne says the overall takeaway is there is no question the proposed changes to linear assessment will mean a loss of revenue for the region.

“It’s uncertain what the final impact will be.

The rurals will have a significant revenue impact and if they’re unable to mitigate this internally it’s something we may have to deal with if they come to us and suggest changes to any funding that exists between the two parties,” Towne says.

“The thing about it is, is when other increases are put upon our homeowners, they don’t look at their tax bill and say, oh this portion has come from the province,” says Councillor Johanna Downing. “They look at their tax bill and say the Town of Peace River has increased our taxes again.”

Deputy Mayor Elaine Manzer points out the current numbers only encompass one year and wonders what they may mean long term.

Towne says based on current trends it’s likely the assessment will depreciate at a faster rate than it’s been replaced and losses will increase.

“Based on the current environment, I don’t think there’s been a whole bunch of new production so the infrastructure itself is getting older and it’s depreciating faster,” Towne says.

Councillor Don Good says former Municipal Minister Kaycee Madu has been blunt that he wants to prevent municipalities from taxing people more, and that likely means the provincial government thinks municipalities should focus on core services.

“It’s not that I don’t feel for them at all but there’s a lot of other factors going in there especially when I look at their salaries too, sorry, I guess half of me wants to say welcome to municipal governments on hard mode and this is what we’ve been doing the whole time,” says councillor Byron Schamehorn.

Schamehorn also wonders what kind of reserves rural municipalities are sitting on.

Councillor Colin Needham says he’s seen what kind of buildings rural municipalities have built, and while the Town of Peace River has benefited, “Any senior administrator or any CAO that can’t find 10 per cent in their budget is not a senior administrator.

This is simple.

There’s lots of places for those rural municipalities to find that money.”

Manzer says the talk around reserves strikes her as “disingenuous” since the Town itself has been trying to build up its own reserves in order to help pay for future projects without having to go into debt. She agrees the Town has benefited from regional help with projects such as the new medical clinic, rec centre and to build Rotary House.

She says she is concerned about what may happen as the years go on if reserves are drained.

“I would have liked the province to have given us a little more length of time to first of all consider this and second of all talk to each other,” she says.

Manzer says it’s awkward at this time of year and if the Minister of Municipal Affairs thought municipalities were spending money on the wrong things, that could have been talked about earlier in the year during annual budgeting.

“On the other hand we’re being told, do something make sure your municipalities are viable, etc. etc., some of that viability is these extra things, though I don’t call them extra, things like libraries, museums, rec [centres]. If we didn’t have those, where would we be?We have to fund them someplace.

Thank you neighbours for helping us out a bit at times,” Manzer says.

“If that goes sideways, well, we’re going to be looking at different sorts of potholes, put it that way.”

Mayor Tom Tarpey says it’s not like the province is paying their fair share for the Peace River airport as it is.

During a minor cabinet shuffle Aug. 25, Premier Jason Kenney appointed Grande Prairie MLA Tracy Allard the new Minister of Municipal Affairs, replacing Madu, who is the new Justice Minister.

During his remarks announcing the changes, Premier Kenney made it clear he also doesn’t want to see increases in municipal taxes.

“Tracy will be challenging municipal governments across Alberta to work with us on creating jobs and growth to recover from the COVID catastrophe,” Kenney says.

“It is critical that our municipal governments stop raising taxes, stop adding red tape that inhibits job creation and focus with Alberta’s government on the overriding goal of economic growth, of job creation, of diversification and competitiveness.”

President of the Alberta Urban Municipalities Association [AUMA] Barry Morishita has called the new municipal affairs minister a “restart.”

Northern Sunrise County Reeve Carolyn Kolebaba says she also hopes the cabinet changes mean linear assessment is put back on the table.

“As it stands it doesn’t work,” she says.

However she is also optimistic about the new minister.

“Tracy’s from the north so she understands us,” Kolebaba says.

Kolebaba says if the premier’s remarks about municipalities raising taxes are directed at Edmonton and Calgary and not the rurals, then he should make that clear.

Kolebaba says it’s not the rural municipalities raising taxes.

“We have not raised taxes in a very long time and we’ve tried to whittle our red tape down through our whole process to make sure red tape isn’t an issue,” she says.

Kolebaba adds that has been her county’s way of doing things since even before the current government.

She says the proposed changes to linear assessment puts an inappropriate proportion of value on oil and gas as opposed to the value of municipalities.

“We will keep pressure on the government to revisit this.”

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