Unpaid municipal taxes from the Alberta oilpatch keep rising despite the industry’s boom, the province’s rural communities say.
“This is the worst ever,” said Paul McLauchlin, president of Rural Municipalities of Alberta, which released the data Tuesday. “We’ve got a serious problem.”
The group says energy companies now owe towns and villages in which they operate a total of $268 million. That’s up more than six per cent from last year and up 261 per cent since 2018, when the association began keeping track.
As well, the rate of nonpayment is increasing.
McLauchlin said there was $53 million left unpaid in 2022 and $38 million in 2021.
The growing tax debt is occurring at a time of record profits in the industry. McLauchlin said nearly half the unpaid taxes are due from operating companies.
“You’ve got the highest commodity prices in a generation, free cash flow like no one’s ever seen. You think that people would pay their bills.”
It’s the third year the municipalities have released a tally of unpaid taxes.
Previously, the province’s United Conservative Party government told the Alberta Energy Regulator that it “may” use factors such as tax arrears in ruling on whether to allow transfers of energy assets. Municipalities can submit statements of concern on applications for licence transfers if the companies involved have unpaid taxes.
Municipalities can also attach liens to property if taxes go unpaid.
McLauchlin said that’s no longer enough.
“I don’t think you can use kid gloves to deal with this. I don’t think ‘nudge, nudge, please pay’ is working,” he said. “You need to use regulation and you need to use enforcement.”
Comment from the Alberta Energy Regulator and Alberta Energy was not immediately available.
Jay Averill, spokesman for the Canadian Association of Petroleum Producers, said industry knows it needs to pay its taxes.
“The revenues generated from industry to municipalities play a significant role in maintaining quality of life for rural communities,” he said in a statement.
“(The association) also acknowledges that we continue to see the lagging effects of a multi-year downturn for the oil and gas sector. We are committed to continuing to work with the province’s liability management system.”
Last March, when the municipalities released their 2021 total, a spokesman for Alberta Energy Regulator said the agency is working with municipalities and the province to find solutions but can only implement government policy.
But McLauchlin calls the regulator “complicit” in the problem. He said many of the remaining tax deadbeats, most of which are not members of industry associations, are companies so marginal the regulator is afraid to crack down on them and force them to close their doors before they’ve cleaned up their wells.
Those wells would then go to the Orphan Well Association, which already has a backlog of unremediated wells that has forced the Alberta and federal governments to bail it out.
McLauchlin said the tax tally and the growing environmental liability of unreclaimed wells on the Alberta landscape are linked.
“(The regulator) uses surface payments and property tax to prop up companies that shouldn’t be operating,” McLauchlin said. “That’s why they’re not enforcing it.
“If they were, (the companies) wouldn’t meet their environmental responsibilities and these companies would go into some level of receivership.”
In 2020, the federal government provided $1 billion for well cleanup in Alberta. The province also requires operators to remediate a certain percentage of their wells every year and has introduced programs that allow the industry to concentrate their cleanup efforts in one area to improve efficiency and reduce cost.
But environmental liabilities continue to grow. Alberta needs to figure something out, McLauchlin said.
“What are we doing here? What’s our plan?”
This report by The Canadian Press was first published March 7, 2023.
WINNIPEG – Police in Winnipeg say one person has died and three more were injured after a pickup truck smashed into a bus shelter on Portage Avenue during the morning commute.
Police say those injured are in stable condition in hospital.
It began after a Ford F150 truck hit a pedestrian and bus shelter on Portage Avenue near Bedson Street before 8 a.m.
Another vehicle, a power pole and a gas station were also damaged before the truck came to a stop.
The crash forced commuters to be rerouted and knocked out power in the area for more than a thousand Manitoba Hydro customers.
This report by The Canadian Press was first published Sept. 13, 2024.
KAMLOOPS, B.C. – A 35-year-old man has been charged with second-degree murder after his mother’s body was found near her Kamloops, B.C., home a year ago.
Mounties say 57-year-old Jo-Anne Donovan was found dead about a week after she had been reported missing.
RCMP says its serious crime unit launched an investigation after the body was found.
Police say they arrested Brandon Donovan on Friday after the BC Prosecution Service approved the charge.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
