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By Alessia Proietti

Provincial government aid funding

Red Deer County writes off $2.3 million in unpaid oil and gas taxes; total now $8 million

Jan 11, 2023 | 3:03 PM

Another $2.3 million has been written off in Red Deer County’s municipal property taxes by oil and gas companies in 2022.

At Tuesday’s meeting, council unanimously approved a bad debt expense for 2022 in the amount of $2,280,879. As of January 10, 2023, the outstanding linear tax amount is $8 million.

Linear taxes are collected from companies that have linear property on municipal lands. Examples of such property include electric power, street lighting, and telecommunications systems, pipelines, railways, and wells, which all typically run in a linear fashion across the province.

County administration stated that the approval of the bad debt expense is required to apply for the Provincial Education Requisition Credit (PERC) and the Designated Industrial Requisition Credit (DIRC) from Municipal Affairs.

These tax credits by the Alberta government are intended to cover the uncollectable portion of the education property taxes for oil and gas companies. All municipalities with oil and gas properties that are subject to the PERC and DIRC are eligible to request a refund or cancellation by the province.

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For 2022, administration calculated that the uncollectable levy by 36 companies includes $434,965.14 from the PERC and $8,584.75 from the DIRC for a total eligible credit of $443,549.89.

Since 2019, the County says allowance for bad debt has been over $1.4 million annually.

The County says it received credit from the PERC program each year, ranging from $226,069 at its lowest in 2021 to $443,550 at its highest in 2022.

At the beginning of 2021, the County says they ran a successful alternative tax payment plan, where four companies registered, resulting in $1.7 million of arrears being paid.

Also in 2021, Bill 77, the Municipal Government Amendment Act, was passed which applied a special lien to oil and gas companies on municipal property with unpaid property taxes. The lien gave municipalities priority over other creditors, except the Crown, from oil and gas companies.

Following review from the County’s lawyers on potential steps for payment recovery, Director of Corporate Services Heather Surkan says they do not anticipate collecting all outstanding tax amounts as some companies went out of business or have been sold.

She says the companies they were able to reach claimed they were unable to pay the taxes due to “cash flow issues”.

The uncollectable levies, Surkan says, have impacted the County’s infrastructure projects such as bridge replacements and road paving and rebuilding.

“The impact is that our service levels must be adjusted in order to balance the budget. We are not able to do as much as we had expected to,” she said.

The County says they will continue to enforce all collection tools and any outstanding taxes that are collected will result in a credit the following year.

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