The amount of property taxes left unpaid by a small number of oil and gas companies continues to swell and is causing growing frustration and financial hardships for many of Alberta's rural municipalities.
According to a survey of the Rural Municipalities of Alberta (RMA), about $253 million in taxes remain unpaid by Dec. 31, 2021, a 3.3 per cent increase from 2020. It's 46.7 per cent higher than 2019, and a staggering 213.2 per cent jump from 2018.
RMA president Paul McLauchlin says delinquent taxes is a growing issue that once and for all needs to be addressed with stiffer rules by the Alberta Energy Regulator (AER).
"It's shocking when you consider that we have the highest commodity prices since 2007, and we've seen cash flows as we've never really seen for almost two decades, really a generation."
A year ago, McLauchlin warned that many rural municipalities have been thrown into crisis by these unpaid taxes. It's threatening their operating budgets and their ability to provide core infrastructure and services. In some cases, it's seen other property owners left shouldering the load with higher taxes and has forced the delay of important capital projects.
"We can't deficit budget, so the only place that money can come is out of reserves, which is meant to replace the roads, the bridges, the infrastructure that we provide for the good folks of rural Alberta. It changes how you operate, and it's been going on since 2015."
McLaughlin says this is in addition to rural municipalities being required to absorb other losses in revenue to help the energy sector, including a three-year property tax holiday on newly drilled wells for the 2022 to 2024 tax year, and the elimination of the well drilling equipment tax.
RMA says it boils down to a reluctance of the Alberta government to hold the industry accountable.
In a written statement, AER says it's working with the RMA and Government of Alberta to understand the concerns and identify solutions that are within our jurisdiction to implement.
"Ultimately, the Government of Alberta sets policy direction for responsible energy development, and the AER implements, enforces, and works within those policies. Under the revised Directive 067, the AER can request information from companies on unpaid municipal taxes when determining if they are eligible to hold a licence and maintain eligibility."
It continues, "Municipalities can share their concerns around unpaid municipal taxes with us by submitting a statement of concern on AER applications (specifically, Directive 067 eligibility applications or Directive 088 transfer applications)."
RMA says some modest progress was made over the past year by restoring the ability of municipalities to place special liens on oil and gas properties, as well as allowing AER to consider payment property taxes when reviewing energy licence approval and transfer applications. McLaughlin says these changes have significant limitations, and neither has properly addressed the issue.
"Enough is enough," says McLaughlin. "We're asking for simple changes to go from '"may" to "shall" and to make sure that the industry is held accountable to pay their taxes. It's a small part of the industry that's doing this, and on behalf of the entire industry, enough is enough."
He says both the Canadian Association of Petroleum Producers and Explorers and Producers Association of Canada have assured RMA that its members are paying their taxes and that its other companies in the sector burdening the municipalities.
"These other folks are just dodging under the radar, pulling out the resource, creating dividends, or moving money out of the province potentially, and it's all those assets that allow the industry to thrive in Alberta so they can get their commodities to market. It's been a partnership since day one, and some people are taking advantage of that partnership."
He says the same applies to unpaid surface leases.
"There are 7,000 surface rights files in this province that companies are not paying landowners the rent that's due. I'm asking AER to become accountable to the people of Alberta in fixing these two key pieces."
If the provincial government doesn't take action, the municipalities could take matters into their own hands.
"I think that our members have had enough, and they may have to use other tools to ensure that these companies that are not paying their bills are no longer permitted to operate in this province.
"We've got the tools to make your life horrible. Just pay your taxes, it's quite simple."