In Alberta, industry is competitively challenged at a municipal level as a result of substantial property taxes on industry assets relative to other provinces and sectors, a growing tax gap between the non-residential and residential classes, and unsustainable growth in tax rates relative to growth in the assessment base.
Alberta Municipal Government Act Review
The Municipal Government Act (MGA) review presents a unique opportunity to improve competitiveness through advocacy to provincial officials and key stakeholders. This process will ensure the tools and authorities municipalities use to deliver goods and services to residents and businesses are balanced in the context of the province's economic competitiveness.
CAPP is currently engaging in stakeholder consultations in the development of the MGA review. Bill 20, the Municipal Government Amendment Act, which represented stakeholder consensus items identified in the review, was passed in the legislature on March 24, 2015. Notable changes include:
- Requiring that all municipalities adopt minimum three year operating plans and five year capital plans to encourage better financial planning
- Clarifying the hierarchy and relationship of municipal and provincial plans, including the provincial land use framework
- Requiring all municipalities to develop codes of conduct that meet provincial standards
- Specifying what can be considered in closed council meetings and
- Clarifying the separation of roles between council and administration
More substantive legislative changes are expected to be introduced in in Fall 2015, with the legislation coming into force in Spring 2016.
Well Drilling Equipment Tax
The Well Drilling Equipment Tax (WDET) was first enacted in 1948 under the Alberta Municipal Government Act to authorize municipalities to pass a ‘well drilling equipment tax bylaw’ to impose a tax in respect of equipment used to drill a well for which a license is required under the Oil and Gas conservation Act. The original intent of the WDET was to compensate the municipalities for the incremental damage to municipal roads caused by oil and gas drilling activity.
At the time of its enactment, the WDET was designed in coordination with the industry practice of vertical drilling. The theory behind the relationship was that longer depths equated to exponential road usage. Over time the cost of the WDET tripled and become a serious competitiveness issue for industry. The advent of horizontal and pad drilling resulted in higher costs without a corresponding impact on local roads.
CAPP and our members participated in the stakeholder discussions, which resulted in a revised WDET formula to take effect over 2016-2019. The new formula better links drilling activity to road impact, and preliminary estimates suggest it will result in $40 million total savings for members over the term of the regulation, based on 2013 drilling forecasts. In addition, the province is consulting with municipalities and industry in strengthening the reporting and accountability of the program to take effect in 2016.
The government of Saskatchewan is currently undertaking a Review of Industry Financial Contributions to Rural Municipalities (RM), Rural Road Infrastructure and RM Accountability, which is expected to be completed in 2015. CAPP is currently engaging with its members in the development of a municipal webtool and submission to the province.