The Alberta government wants to change the law to strongarm oil and gas companies into paying municipalities hundreds of millions of dollars in outstanding property taxes.
Municipal Affairs Minister Ric McIver said on Thursday his proposed legislation may not recoup all of the estimated $245 million owed to 69 rural municipalities (RMs). But he says it's a start.
"This is a hammer," McIver told reporters. "Among the vast majority of responsible oil and gas companies that pay their bills, there's some bad actors that are refusing to. And the hammer is required."
The "hammer" he wields is Bill 77, the Municipal Government (Restoring Tax Accountability) Amendment Act, tabled in the legislature Thursday.
If passed, the change will allow municipalities to place a special lien on both owners and operators of oil and gas companies that owe taxes.
It will apply to land housing both pipelines and equipment, such as tanks and separators.
McIver said it gives companies in arrears 120 days to pay up, or strike a payback deal with the municipality, before the municipality can seize any of their property within its borders.
The special lien would also bump a municipality higher up on the list of creditors to be paid out, should the company be bankrupt.
"The idea is not to spur a bunch of legal action, but rather, to spur people to pay their taxes in the first place," McIver said.
The move comes after a 2019 Alberta Court of Appeal decision that said municipalities could not place special liens on properties housing pipelines. The bill seeks to restore that power.
Since then, the amount of money owed to municipalities has ballooned, according to the Rural Municipalities of Alberta.
A survey of the organization's members earlier this year found all of them had industrial landowners in arrears. The amount owed had tripled to $245 million in 2021 from $81 million in 2019. And nearly 60 per cent of the companies that owed money were still in business.
Energy Minister Sonya Savage said the problem has been years in the making, as companies struggled to stay afloat with low oil prices.
McIver expects it to take time for RMs to recoup the money. Meanwhile, the government to extend for two more years a program that forgives education property tax payments for counties and districts owed money.
The Provincial Education Requisition Credit will continue until the end of the 2023 tax year.
Shortfalls affecting services, delaying repairs
Rural Municipalities of Alberta (RMA) president Paul McLauchlin said he's hopeful the bill would prompt oil companies in arrears to approach RMs to work out agreements to pay what they owe.
"I think this sends a signal to [the] small amount of players to make sure that they understand that municipal taxes are a critical part of working in rural Alberta," he said.
McLauchlin says it has forced cash-strapped municipalities to delay infrastructure projects, like repairing bridges, or drawing from their savings to cover operating costs, since they can't run a deficit.
If the problem persists, some municipalities may go broke and be forced to dissolve, he said.
If the bill is passed and proclaimed, McLauchlin hopes more money will begin to flow in by spring. If it doesn't, he'd like to see the Alberta Energy Regulator deny operating licences to companies with unpaid tax bills.
NDP municipal affairs critic Joe Ceci said the government reacted too slowly.
"This is an issue we have heard about for years, and the UCP has failed to act before it reached a crisis situation," he said.
If the bill passes, McIver said he hopes to proclaim the legislation quickly, but did not give a timeline.