What is linear assessment? Linear tax revenues are revenues collected by municipalities from companies that have linear property located in Yellowhead County. They are items like oil and gas wells and pipelines, and power generation, power lines and utility lines.
What changes is the Provincial Government proposing?
The Government of Alberta undertook a closed-door review of the provincial linear assessment model for wells, pipelines, machinery and equipment in a municipality.
The Government of Alberta is seeking to change the system for assessing industrial properties and facilities in the oil and gas sector, including wells, pipelines, machinery and equipment. These changes have the potential to reduce the amount of revenue for the County by up to 21percent.
There are four proposed scenarios to consider (A-D). All four scenarios will result in a reduction in assessment, resulting in a significant amount of property tax revenue loss for Yellowhead County and other rural municipalities including our urban neighbours.
How will this impact me as a county resident?
The County could lose up to 21% (or more) of its property tax revenue.
In order to compensate for the loss in tax dollar revenue, Yellowhead County will need to consider increasing the residential mill rate, increasing the non-residential mill rate, and/or reducing expenses and services.
Rural residents will be the ones forced to shoulder the financial burden.
Why does the county have an issue with the process?
Three stakeholder engagement sessions were conducted behind closed doors between February and May of 2020.
Our concern is the process of this review, specifically the:
- Lack of transparency during the meetings leading up to this announcement,
- Short timeline before the decision is to be made by the province (30-day feedback period ending on August 24), and
- Lack of communications from the Government of Alberta and the non-existence of public engagement with Alberta citizens that should be coordinated by the province.
Will this help local oil and gas companies?
Yellowhead County supports our friends in the oil and gas sector, however, our concern is that the review outcomes will achieve none of the intents of helping our local oil and gas industry.
The information we have received indicates that there is no data that shows that the proposed assessment changes will offer specific guaranteed competitive benefits for oil and gas operations in our area – which was one of the objectives of these proposed changes.
There are 750 oil and gas companies in Alberta. Only a few may significantly benefit from these changes.
Under scenario D, only a handful (3.6%) of Alberta’s 750 oil and gas companies will receive an average tax savings of $7 million per company, while 44.7% of the 750 oil and gas companies will receive an average tax savings of only $819.
We believe that Yellowhead County, on behalf of our residents and local industry, deserves to be part of the solution to industry competitiveness, instead of being forced to absorb crippling changes to the assessment model.
Can’t the county make up this lost revenue elsewhere?
Yellowhead County, as a local rural municipality, has only three sources of revenue options:
- Taxes (includes Linear Assessment)
- User Fees
In order to continue to be able to provide the current services to residents and local businesses and industry, the municipality would need to collect revenue from these other options.
Raising tax rates to offset the impacts of the assessment model change will have the effect of simply transferring taxes from the oil and gas industry to other businesses (that would include local oil and gas companies) and residents.
Some people think the county has a spending problem, are they right?
Most of the County’s budget goes to infrastructure, with the majority of that being road development and maintenance on new and old roads. There are currently over 2,000 km of gravel roads and approximately 250 km of paved roads in the County. These roads support our local resource industries – 60% of Yellowhead County’s current capital budget goes toward road building.
In 2020, $23.5 million of the county’s budget went towards the infrastructure-related costs of operating services such as water/waste-water and sewer operations and maintenance, as well as road grading and snow plowing and removal – a vital service to keep local industry moving in Yellowhead County. These are the roads that haul local resources, get residents to work and job sites, and get your kids to school.
This amount does not include emergency repairs, such as the recent $2.67 million taken from county transportation reserves to pay for repairs to Yellowhead County roads and culverts caused by recent rain and groundwater flooding. This is an example of additional unexpected costs that the municipality has to deal with regularly to keep local infrastructure from further damage, deterioration, and disrepair
Even if we cut our spending in half, we would still be significantly impacted by these cuts.
Will this affect the towns?
Yellowhead County currently provides millions in annual payments to the Towns of Edson and Hinton.
Currently, it’s about $2 million to Hinton and $5 million to Edson for revenue-sharing alone.
This is in addition to our cost-sharing agreements with the Towns of Edson and Hinton which provides several million for in-town services that county residents use such as recreation facilities, museums, the Edson airport and more.
Our ability to continue these revenue and cost-share agreements with urban and rural partners could be at risk. In our revenue-sharing agreements with the towns, it stipulates that if the province changes legislation or regulations that negatively affect the revenue of the County by more than a million dollars, the agreement may be terminated. All the scenarios presented by the province will exceed this amount.
What can or should I do?
Yellowhead County will continue to advocate for the sustainability of the municipality and the residents we serve, BUT WE NEED YOUR HELP.
The recommended changes are currently under consideration by ministers and provincial decision-makers, and we’re requesting assistance from our residents. There is a 30-day feedback period between July 24 and Aug. 24.
If you haven’t talked to your MLA about clarification on the significant impacts these changes would have on your rural municipality, CALL THEM RIGHT AWAY. Talk to your local municipal councillor. Ask questions!
Want more info?
For more detailed information and contact information as well as downloadable PDFs and letter templates for sending to your MLA and provincial ministers go to our Linear Assessment info page.