The troubles facing oil companies in light of a prolonged slump in prices is taking its toll on municipalities.
Reeve of Kneehill County Bob Long says that last year the county wrote off $600,000 in funds owed to the county by oil companies.
“The position that you are in is there is really no assets you can go after to recoup,” said Long. “The assessment is based on the production on those sites, and there was $600,000 of that assessment that wasn’t paid for. It is a big impact.”
On top of the lost revenue from those assessments, he says the province still expects the municipality to collect the school requisitions. The Alberta Association of Municipal Districts and Counties (AAMD&C) has begun lobbying.
“The AAMD&C has resolutions that are moving forward asking the government for that relaxation, but it is still in the works,” said Long.
He has also heard about some landowners who are also having trouble collecting what is owed from troubled companies.
“I would assume that some of the stuff we are experiencing, they would be experiencing as well,” he said.
The trouble in the energy sector hits municipalities in other ways.
“There are all kinds of things. The impact from the oil to this region on our linear, last year we lost $200 million of assessment, which was about a $2 million absolute cash hit to us,” said Long. “When you put it all together it is a serious thing we are trying to deal with. How do you come up with $2 million as a compensation for that? “
He explains that assessment was as of July 2015, so currently, they are waiting to see the impact for this year.
“You hear so much about the royalties that oil companies pay at the provincial level, I don’t think a lot of people truly understand the impact oil companies have on the financial situation at a local level,” he said. “We know first hand what their contribution is, and it’s major. We value that relationship highly.”
