That Will Cause Municipalities to make some Difficult Choices
"They're going to have to make some future budget decisions based on the fact they just have reduced ability to collect,""Whether it's the oil and gas assessments that are dropping or real estate assessments are dropping, it's going to have us adjusting our tax rates, no doubt about it, or [adjusting] our service levels," Kemmere said.
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Outstanding property taxes owed to rural municipalities in Alberta by energy companies have reached the highest level ever, according to the Alberta Association of Municipal Districts and Counties.
After the 69 municipal districts and counties reported at the end of September, the outstanding amount had grown to an excess of $18 million, president Al Kemmere told CBC News.
"It has been growing over the years, and this is our highest year ever," Kemmere said.
It's the latest blow to a struggling rural economy that is feeling the impact of a weak harvest and continued downturn in the Alberta economy.
Kemmere says adding to the problem is a requirement for municipalities to pay the provincial government about $4 million in education tax, regardless of their ability to collect.
That will cause municipalities to make some difficult choices, he said.
Al Kemmere, AAMDC president, says strapped rural governments have tough choices ahead. (Twitter)
"They're going to have to make some future budget decisions based on the fact they just have reduced ability to collect," said Kemmere, noting that local governments are also nervous about the new carbon levy set to begin in January.
At the AAMDC's annual fall convention this week in Edmonton, members passed resolutions asking the provincial government to exempt municipalities and agricultural operations from paying the carbon levy on natural gas, gasoline and diesel.
"Whether it's the oil and gas assessments that are dropping or real estate assessments are dropping, it's going to have us adjusting our tax rates, no doubt about it, or [adjusting] our service levels," Kemmere said.
In addition to failing to pay property taxes, some energy companies have stopped paying landowners their annual land lease rent. Alberta landowners are required by law to lease their property in exchange for annual payment.
More than 2,000 landowners unpaid
As of the middle of November, the Alberta Surface Rights Board had opened a record 2,272 applications from landowners who haven't received payment from the energy companies. Of the total, 546 are waiting to be processed in the backlogged system.
That's triple the applications received in 2015. The board has recommended the provincial government pay the landowners $1.9 million to compensate for the missing cheques.
Gary Leach, president of the Explorers and Producers Association of Canada, says he's not surprised some energy companies aren't paying their bills, given the two-year slump in crude oil and natural gas prices.
EPAC represents junior and mid-sized oil and gas companies.
"It doesn't surprise me that the smallest companies are exhibiting the greatest stress," Leach said.
"They're most vulnerable to a decline or disappearance in their cash flow. Service companies and suppliers that provide services and products to those companies are also feeling the pinch.
"Municipal governments are in the same boat. If a company can't pay, they're not able to pay anybody."
The provincial government has set up a working group with the AAMDC, two government departments, and the Alberta Energy Regulator to look for a solutions on how to handle the drop in revenue to municipalities.
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