Rural Alberta coping with $81-million shortfall in oil and gas taxes. How did we get here?

Oil and gas industry pumpjack

An analysis by The Narwhal found many rural municipalities are deeply reliant on oil and gas payments for their tax revenue — some as much as 96 per cent. A new UCP government proposal to cover for industry is controversial among some rural officials who say they’re forced to cut services while companies are ‘flouting the process’

F or small, rural municipalities in Alberta, the fortunes of a single oil and gas company can be acutely felt.

This summer in Mountain View County, a rural area just north of Calgary, gas company Trident went bankrupt, leaving 4,700 orphan wells and hundreds of thousands in unpaid taxes in its wake.

Bruce Beattie, the reeve of Mountain View, which has a population of about 13,000 people, told The Narwhal Trident’s sudden fall places a significant burden on the county.

The county “will be looking at a reduction of half a million dollars in our revenue from the oil and gas sector,” Beattie said.

He’s hopeful the county can survive the shock by tightening its belt.

“When you have 363-odd bridges, for example, to look after and 2,800 kilometres of roads — those numbers are significant,” he said.

“That kind of an impact is definitely going to be felt at the municipal level.”

Mountain View is by no means alone.

Earlier this year, the Rural Municipalities of Alberta — the organization representing Alberta’s rural counties and municipal districts — put out a press release, saying a survey of its members found many oil and gas companies hadn’t been paying their taxes.

The amount of lost income for rural municipalities, the association said, is “unprecedented.”

The survey found at least $81 million in unpaid taxes from oil and gas companies had accumulated across the province, creating a “significant hole in rural municipal budgets throughout Alberta.”

In 2015, new rules came into effect, requiring for the first time oil and gas companies publicly disclose how much money they pay to governments, from the municipal to federal.

The Narwhal analyzed data filed under the Extractive Sector Transparency Measures Act (ESTMA) to examine how reliant counties and municipalities in rural Alberta are on oil and gas payments for their revenues.

The findings show two thirds of Alberta’s rural municipalities received tax payments from oil and gas companies totalling more than $2 million in 2018.

In some cases, the taxes from oil and gas companies made up more than 90 per cent of local governments’ available tax revenue.

But as the experience of Mountain View shows, a high reliance on industry payments can create a deep vulnerability for local governments that must weather the highs and lows of a sometimes volatile market economy.

The fragility of the tax base is opening up new concerns for municipalities across rural Alberta who are openly questioning measures by the current government to step in and give parts of the industry a break. MORE