Good news came to the MD of Foothills this month as the Province announced it will reimburse municipalities for lost tax revenue from oil and gas properties.
Shaye Anderson, Alberta minister of municipal affairs, announced at the annual Alberta Association of Municipal Districts and Counties (AAMDC) the provincial government will assist with education tax amounts on oil and gas properties in arrears on municipal taxes.
“Oil and gas properties being left abandoned put municipalities in a tough spot because those wells are taxed until there is an abandoned status on the records of the Alberta Energy Regulator,” said Lauren Ascott, municipal affairs press secretary. “The status change process can take several years, and in the meantime the municipality is required to pay education property tax.”
She said the government has committed to reimbursing municipalities for education tax amounts paid on those properties retroactively to 2015. It will paid out until the end of 2019, to a maximum of $10 million province-wide.
Payments will be taken out of the Alberta School Foundation Fund’s net asset fund, which is a surplus intended to cover assessment changes or revisions, or budget shortfalls, she said.
It’s great news for the MD.
“That was quite an important announcement for the MD of Foothills,” said Reeve Larry Spilak. “We have been asking the Province for some sort of rebate or asked them to cover those part of the taxes for going on two years now.”
The MD of Foothills has paid about $900,000 in residential education tax amounts to the Province for properties owned by Lexin Resources, which was ordered by the Alberta Energy Regulator to shut down all operations in mid-February. The company was in arrears to the MD from 2015 and 2016 for $4.1 million.
Though the lost tax revenue won’t be paid back, seeing relief from the education tax payments will make a positive impact on the MD, said Spilak.
“It will make a significant difference to our next year’s tax implications,” he said.
For the past two years, the MD has dipped into its reserve funds to cover Lexin’s portion of education tax amounts, he said. The credit payments will go back into those reserves, he said.
“This is going to continue to be a significant burden on the MD and the taxpayers,” said Spilak. “From the past two years we’re already recovering a substantial amount of money, but it would have been even greater going forward in the next two years.”
MD CAO Harry Riva-Cambrin said the total amount of education tax the MD is unable to collect will amount to about $1.1 million by the end of 2018. It’s been a difficult two years waiting for the Province to take action, he said.
“It’s been a long process, and the AAMDC has been working on it, and I believe finally the new minister grabbed the bull by the horns and got’er done,” said Riva-Cambrin.
He said the MD isn’t optimistic about collecting the $4 million owed in taxes to-date, though the municipality is part of the legal action against Lexin. With a list of creditors ahead of the MD, he said it will depend on whether there is enough assets to pay out everyone.
“I highly doubt there will be, but we’re not ready quite to give up yet,” said Riva-Cambrin.