Tax revenue shortfall forces Woodlands County to scrap all non-essential spending

A county north of Edmonton is scrapping all non-essential spending due to a $9.5 million shortfall in tax revenue.

The shortfall is largely due to two major oil and gas corporations in Woodlands County, which were unable to pay their taxes.

Taxes from the two businesses, one of which is Trident Exploration, account for about $8 million of the county's shortfall, Woodlands County Mayor Ron Govenlock told CBC News on Thursday.

Govenlock said Trident Exploration was unable to pay approximately $2.4 million in taxes. It ceased all operations in the spring. 

The remaining tax revenue shortage was due to uncollected taxes from residents and other smaller companies, said Govenlock.

"It's a new reality that we're having to address and it's having severe consequences for us, and it means serious adjustments have to be made," he said.

The Woodlands County mayor has been living in the county his whole life and has never seen anything like this.

"$18 million is the tax component of our budget and when you lose $8 million, it's a significant factor," Govenlock said.

As a result of the shortage, the municipality has issued a wage freeze and has cancelled several projects that were in the 2019 budget, Govenlock said.

Initiatives like dust control, maintenance on rural roads, a paving project, and other improvements in the municipality of a similar nature have been terminated or postponed until the county reviews them again during the 2020 budget deliberations, Govenlock said.

The county said in a news release on Aug. 12 the intent is not to eliminate programs and services, but "to ensure the delivery method and efficiency of operations is appropriate and strategic." 

59 counties facing shortage

"Woodlands County is not alone in facing this predicament," the news release stated.

Since the oil price crash in 2014, it's been a common occurrence for oil and gas companies in Western Canada to fail, resulting in difficulties by municipalities to collect money from the energy sector.

Woodlands County/Facebook

Last year, 59 out of 69 counties had uncollected money from the energy sector, according to the Rural Municipalities Association (RMA).

The collective total was more than $80 million.

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Govenlock says the province needs to review how it regulates the energy sector.

Since February, when the county first released information about a growing revenue shortage, Govenlock says he has been in touch with the Minister of Municipal Affairs Kaycee Madu's office, but has little luck on finding a resolution.

"It bothers me seriously that the provincial government is sending out the message that the oil and gas industry is more important than municipalities or the residents of this province," he said.

"I don't dispute the fact that activity in the oil and gas industry is important, but you don't put the residents of this province and their interests or municipalities second to oil and gas."

A spokesperson for Alberta's municipal affairs ministry said the provincial government established the Provincial Education Requisition Credit program for uncollectible taxes on shallow gas properties shortly after being elected.

"While these programs won't solve all of Woodlands County's issues, they will help," they said in an emailed statement.

In the meantime, Govenlock says the county has tried to take matters into its own hands by contacting the second energy corporation that has yet to pay its fair share.

"Woodlands' intentions [are] to try to track down the president and the CEO of that company and have a personal face-to-face conversation with those guys because we've been trying via emails and phone calls to confront those individuals and have had no success. We're hoping that we can up the ante a little bit with regard to having that particular conversation."