‘Tis the season to talk taxes

Connect Council – Public Letter

By MELISSA BLAKE, Mayor of the Regional Municipality of Wood Buffalo

Mayor of the Regional Municipality of Wood Buffalo

With our local economy dependent on the oil sands, our communities feel the heat and the chill of global pricing, which is even more tempered by limited market access.

Reduced spending by industry in this lower for longer price environment has resulted in job losses and uneasiness in the region. Along with a significant reduction in contract opportunities, the pinch is felt throughout almost every business – and family – in our region.

I am proud of the incredible support Wood Buffalo gives to our social profit agencies and those in need, helping offset the real impacts of this recession. These giving actions are what help make us strong and resilient.

Here is where I take exception to the recent call from a local oil executive speaking at a construction association luncheon. One headline read “Municipality must tighten belt like oil sands has, Suncor VP says”.

Councillor Vinni’s submission to the Connect in January lays out why our Municipality and governments generally should continue to invest in the communities they serve during tough economic times: We may be the only ones that can stimulate local job opportunities right now. If we’re not investing in Wood Buffalo, who is?

Taxes, user fees and grants from other governments are the only means of revenue for our Municipality and it funds the dozens of public service areas for which we are responsible to our citizens.

Our historic challenges in receiving funding from other levels of government, which is different than support by the Province for its own responsibilities, left us no choice but to use our own revenue sources to fulfill our responsibilities.

In the past, the Municipality created budgets that couldn’t meet the needs of our growing population because there was no way to pay for doing more. We made the case to keep pace with growth when we intervened in 2005: Not to stop industry from growing but to get what the region needed to accommodate it.

We then set out to make property taxes in Wood Buffalo the lowest in Alberta. The mission was for homes and businesses of comparable attributes in Alberta to pay a similar value. Where our home and business property values were skyrocketing, the technique reduced the mill rate which is multiplied by the assessment value to achieve the municipal tax bill.

The rapid expansion of the oil sands and the economic growth of the last 15 or so years, before this downturn, is what led to increased tax revenue from everyone, including industry, but not on a percentage basis. As the oil sands and production expanded so did the revenue generated.

In that sense, while it’s true we all pay more when our property value goes up, it does not mean our tax rate was increased.

During this period of rapid growth, industry significantly increased ‘fly-in, fly-out’ for construction and operations, and it paid living out allowances which tipped the scales on the community rental market. Our 2015 Census counted over 40,000 residents living in project accommodations! While this developed, the Municipality struggled to build a family friendly community. Oil went to a peak of almost $140 a barrel, with no extra funds/taxes/revenues for the Municipality to build the community. The global financial crisis dropped the price of oil briefly in mid-2008, and then it came back up. Since then we have encouraged industry to look over our budgets and have even suggest what we should cut.

The Municipality uses a ‘revenue neutral plus new growth’ approach that keeps tax rates in check and services on track. Tax rates in every category, including for industry, have been coming down over time.

We have tightened our beltsat the Municipality. We cut $14 million in operations and $84 million in capital in 2015, even as we brought Transit Services in-house. The 2016 budget removed growth items before Council workshops gave us the collective chance to make more changes, then another $30 million was eliminated by Council after the 2016 budget was adopted. For those counting, that’s $128 million in cuts in the last year alone.

We didn’t see industry participate in our 2016 Budget Workshop until the Oil Sands Community Alliance (OSCA) came to present on our last day of deliberations. At that same OSCA presentation, I asked specifically what portion of the cost per barrel was municipal tax in comparison to provincial tax and royalties and federal tax.

Honestly, this region matters more and should get more than the other two but I’m not sure that’s true… This $1 dollar a barrel is new information to me, and I still don’t know how much of the cost per barrel goes to Federal and Provincial treasuries.

The bottom line is that we didn’t have what we needed, when we needed it (dollars, land, or labour) and we are still catching up, though no longer incorporating growth.

We all need to be on the same page about population, we need to know what industrial projects are to proceed and when, and we need to adapt as times change. I don’t think we need to blame each other when both industry and the municipality should be strong partners who respect each other and the jurisdictions we each have.

In partnership, I look forward to the next part of the conversation.

-Connect Weekly-