South Peace News
Big Lakes County suffered a shortfall of just over $6 million in tax revenue from oil companies unable to pay property taxes for the past two years.
At its regular meeting Dec. 11, council approved a recommendation to write off 85 tax rolls in uncollectable taxes from oil companies in the amount of $6,018,800.11.
“Our total tax revenue is $29 million annually, so a $6 million write-off is a big challenge,” says Heather Nanninga, director of corporate services.
“There’s no question, that kind of write-off hurts.”
She adds reduced funding from government grants also hits the county.
“To add to the issue, provincial funding is decreasing in 2020 and new costs are being downloaded to municipalities,” Nanninga says.
“The end result is that we’ll need to tighten our belts and focus on finding efficiencies.”
Council approved the write-offs for 11 oil companies who either do not exist or do not have financial means to pay outstanding property taxes owing, according to a report to council.
Reeve Richard Simard says the county has prepared for the tax blow.
“We’ve been planning all year for this,” Simard says. “We did some drastic cuts to our capital projects.”
He says it will not affect regular services to operate the county.
“We want to keep the same level of services; we have to provide services,” Simard says.
“When those companies don’t pay taxes, it affects us.”
The county is not alone in the situation caused by the declining activity in the oil and energy industry in Alberta.
Rural municipalities in Alberta face the same issue.
“We’re all in the same predicament,” Simard says.
“All the people I talk to from other rural municipalities say they’re dealing with the same thing.”
Municipalities will get some relief from the Provincial Education Requisition Credit (PERC) that was rolled out in late 2017 to help with some of the burden of uncollectable taxes from the oil and gas industry, Nannnga says.
“When we can show that we’ve written off some amount of taxes as uncollectable, we get a rebate on the school taxes that were attached to those properties.”
The reeve says the credit program helps cushion major loss in revenue.
“It’s better to write off the taxes so we can recover some of the school taxes portion,” Simard says.
Nanninga says PERC will help to some degree.
“It’s a fantastic program that we’re delighted to have,” Nanninga says.
“We actually just heard that the Province is extending the program through the 2021 tax year.”
She explains the process.
“When oil and gas properties are subject to school taxes, the county gets an invoice from the Province based on the county’s total assessment for each property class, Nanninga says.
“The problem comes when we don’t collect either our municipal taxes or the education tax.
“We still need to remit the education tax in to the Province, even though we haven’t actually collected it ourselves yet.”