Assessment Model Review: members made their voices heard

Between late July and mid-October, MLAs and the Government of Alberta received a record number of letters and inquiries from municipalities about the impacts of the Assessment Model Review that began in January 2020 and was jointly led by the Ministry of Municipal Affairs and the Associate Ministry of Natural Gas and Electricity.

On October 19, 2020, the Government of Alberta announced that it would not currently be moving forward with any of the four assessment model scenarios proposed as part of the Review, but instead will implement several short-term initiatives intended to enhance oil and gas industry competitiveness. Most of the initiatives will be in effect for three years, which will provide time for further consultation on the modernization of Alberta’s assessment model for regulated oil and gas properties.

This approach aligns with the feedback and recommendations that AUMA provided to the province. The initiatives focus on municipal property assessment and taxation and include the following:

• Three-year “property tax holiday” on all new wells and pipelines
  • Beginning in the 2022 property tax year, new wells and pipelines will not be taxed until the 2025 tax year. Therefore, the tax holiday applies to the 2022, 2023, and 2024 tax years.
• Elimination of the Well Drilling Equipment Tax beginning in 2021
  • This elimination is expected to be permanent.
• Three-year assessment reduction on low-producing wells
  • This reduction will be implemented through changes to Schedule D of the Alberta Linear Property Assessment Minister’s Guidelines.

While these initiatives will have significant financial impacts on many municipalities, they will be less than impacts resulting from the changes to the assessment model that were considered as part of the Review process earlier this year.

All Mayors and CAOs should have received an email from AUMA’s CEO on October 27 highlighting the financial impacts of the initiatives for urban municipalities specifically. The annual loss of taxation revenue for urban municipalities will be $122,591, a small number when compared to the rural municipalities’ losses which will total just over $121,000,000 annually.

AUMA appreciates the willingness of the Minister of Municipal Affairs to develop moderate, short-term tax relief initiatives for the oil and gas industry, making time for a longer-term and more fulsome assessment and taxation review process, including comprehensive consultation with municipal and industry stakeholders.

Municipal Affairs has advised that a plan setting out the details of the more fulsome assessment and taxation review will be prepared and released in the first half of 2021. AUMA and its member municipalities look forward to participating in this review process.

If you have any questions, please contact AUMA’s Advocacy staff at  advocacy [at] auma.ca (advocacy[at]auma[dot]ca).